Oh boy was today fun. Several of my short picks were up over 8% to start today, and WHAMO, the federal government strikes back.
Today, US Treasury Secretary Henry Paulson MENTIONED forming an entity similar to the Resolution Trust Corp which bailed out the savings and loan crisis in the late 1980′s. Minutes later, the markets spiked and gobbled up almost all of yesterdays losses (although we closed below yesterdays open after touching it).
I just love whipsaw markets like this, because people start to panic, volatility rises, and there is some serious money to be made in options with this type of action; but that’s for another discussion.
Today’s Chart:
The action today formed (well almost) a piercing line candlestick pattern. What this means is today is an inflection point, and tomorrow’s (friday, september 19th, 2008) price action will be crucial in predicting where the market goes next.
Strong buying action tomorrow will likely be a strong technical clue that the indexes have reached a near term low. However, if tomorrow shows weakness is means the bears have solid control of the market and will contiue to do so for the coming weeks.
Technical Analysis
One bit of good news for those of you who enjoy Bull Markets, is that the daily chart is showing serious bullish divergence between price and volume action in the PPO and Accumulation / Distribution. Take a look
Forecast
My forecast is…. Sit and wait. This weeks volatility make tomorrows price action much to significant to try and predict what’s comming until after it happens. If you have any trades that are setting up, wait until 30 minutes before the market closes tomorrow to clue you into whether you should go long or short.
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