7. July 2009 20:28
The markets haven't disappointed! As I mentioned last time, they were more likely to come down and so they have done just that.
If we do have a prolonged downtrend, that can only be good for us as there will be some great bear flags for us to trade. What we need to see now is a consolidation so these patterns can form.
In the meantime, let me point to some more interesting observations as the medium term perspective could well see more of the same ...
First, let's look at the DOW.
As you can see, it's formed a classic Head & Shoulders pattern, and has even broken through the neckline formed in May. This is bearish and points to a fall below 8000.
The S&P is no better. In this case though, we haven't penetrated May's lows yet, but we have made the lowest close since April. 825 looks like an interesting target.
And just as a follow up from last time, take a look at RIMM, which has broken its bear flag pattern to the downside. There's a gap from early April that looks like it wants to be filled, thoguh that would be some move!
What next for the markets? Well, don't be surprised to see a rally of sorts or a consolidation near these levels over the next few days. Earnings is nearly upon us and the markets are bracing themselves.
Trade with care and take those first profits EARLY, even if it means just taking that first dollar move. Hopefully the second half of your trade will take care of itself.
All the best