What Might Happen Tomorrow

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August 27, 2010

Which pattern is going to happen?

I think there is a chance of both. A possible slip to touch support and a pop. If we gap up and run we gap up and run that is fine. However, I moved back to the short side adding EDZ, FAZ, and the 2x inverse funds. The reason is simple. Its a down trend. With everyone concentrating on the inverse head and shoulders pattern, I’m thinking double bottom.


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  • Bill

    So do you think that was that the double bottom today?

    This market just doesn’t want to trend in either direction. Wide ranging chop zone continues. We’re still stuck in the flash crash candle almost 4 months later… incredible. Economy too shitty and charts too broken to support a sustainable rally, but sentiment too bearish and too much Fed money printing to allow a sustainable downtrend. So we just chop in this sideways range between 1130 and 1040. How long can this range trading continue is the question?

  • http://www.stockrake.com StockRake

    Its a weird time for sure.

    The way I was playing it:
    We selloff today create a deep oversold condition, create that close that nobody wants to buy, and then get a lift next week. Instead they killed the whole week’s worth of trading action on Friday. Moreover, the best part of short term swings have come on the last day of the swing. None of that happened and we weren’t that oversold for this move to happen.

    I think we are going to have more chop, but have to be close to a decent trend. Its been too choppy for too long.

  • Bill

    Yep, it sure has gotten really comfortable and easy to just buy the dips and sell the rips. It should be time to change the locks soon. Probably after Labor Day when the volume returns

  • http://www.stockrake.com StockRake

    Looks like today might kick off a move into the next range lower.

  • Bill

    It is interesting that the Friday sell-off that you were looking would have been short-term bullish for this week. Maybe by it not happening the market was telling us that it did not want or was not ready for a short-term bullish set-up.

    If the market had wanted to go up they would have shaken out all the bulls Friday with a washout. Instead they shook out all the bears so that they could take her down hard this week??? hmmm…. the bus does travel faster with fewer aboard.

  • http://www.stockrake.com StockRake

    Exactly.