Wednesday 9 October 2013

Something to write home about

Yesterday was the day when the DOW broke support and stayed down. Also the FTSE broke out of its channel. So now we need to be on the qui vive.

There was something else that I had missed. I am not a very organised person and I can't keep tabs on too many things at once. Although I follow the DOW and the S&P I tend to ignore the NASDAQ.

Have a look at this chart of the NASDAQ Composite. It has had a fabulous rum up with none of the hesitation that we have seen in he DOW. To be fair it's still a long way from its all time high. Anyway, key point is that yesterday saw it stumble significantly for the first time in a while. People are getting nervous.



The S&P also fell sharply and hit a support line (not the most fantastic of support lines) very close to the 78.6% retracement. So we could see a bounce. But read on.



The DOW made a clearer break out from support. It would be fully confirmed by a return to the resistance line and a bounce back down. The futures market is indicating a recovery this afternoon.

The other feature of the DOW is the possible development of a triple top. One of the strongest indicators of a market reversal. The pattern would be more convincing if he three tops were closer in height instead of being on a rising trend. Still it could turn into one hell of a signal.

I've pulled my remaining long positions in the US. The confirmation of a triple top would be a fall below the first low in the formation. If we see that I might risk a short.

So guys hold onto your hats, this could be the big one.




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