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Wednesday, April 25, 2012

Apr 25

Goodbye correction, we hardly knew ya ... ya ... yadda .... yadda, yadda, yadda ....

With today's gap up things point strongly to the correction being done. A troubling sign yesterday was that the market moved back up into the previous bear flag territory (too aggressive for a retest) and refused to break down. Very tough and hard to interpret because it just parked itself for the rest of the afternoon lending to a move up or down.

Like I was saying Monday: "My 60-min Trend System is also expecting a lower low (see: Apr 7 - Daily and 60-min Cycles, Looking for an Edge). But the bear flag has already set the stage for a very large divergence with the next low. So I am expecting a pullback to look something like this: Apr 19".

Unfortunately only half of the prediction came to pass. We had massive divergence on Monday, but no lower low. Instead we got a quasi-double bottom. So that means that instead of getting a true divergence bottom, we got this double bottom that is very reminiscent of Nov 2010.

And if the market stays above 138.50 until Friday, then we will likely get a new 60-min Long Cycle Confirmation, which will just confirm that the down-cycle really is done (the signal that was sent out today: https://twitter.com/#!/binve01/status/195143049330950146 was a sub-cycle cover/buy signal). And from a time perspective, this 60-min down cycle will be pretty close to average. So I just have to respect the fact that the lower low does not look likely and that a double-bottom was all we were going to be offered. Oh well.

Bull's are ready to charge again. So heed the tape and move on.

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