Tuesday March 8, 2016
Key Developments :
- Market pulls back with a close just below the trend we talked about yesterday but above 8EMA.
If you read last nights report, I said the dream trade would be for a close just below that trend-line. Why? Well despite the presence of a H&S I am betting long tomorrow because if you look at the 2nd chart below. In both rallies the close just above the 8EMA has returned a 2 day short squeeze. Will it happen again? I don’t know, but I’m making the bet, because that is what we do as traders. We recognize how the market typically reacts and try to make a calculate risk trade.
Here are a couple of ways to look at the internal action.
1) It’s a H&S.
The Bottom Line:
Despite the overseas noise, the pull back looks very contained. One could argue that we have a H&S present, but I am leaning bull flag. I still think we see 2030 before this rally ends.