DAILY MARKET RECAP Wednesday June 1, 2016

Posted on Wednesday June 01, 2016

Wednesday June 1, 2016

The following is  be used for Informational purposes only. The charts are fact, however my interpretation is an opinion which I am sharing with readers. None of this is a recommendation to buy or sell anything. You must do your own due diligence. 


Key Developments :


  • Another bearish pattern trapped as the dip continues to be bought. 
  • Must focus on the two bullish patterns first and foremost until they are invalidated


I tried a cute short overnight last night, as it looked like we were forming a right shoulder for a move down to 2075. That was quickly invalidated this morning despite the gap down and took me out for a small gain. I showed how I traded it in the mid-day refresh (here). My rule is higher low, higher high above bearish neckline = cover. 

The only bearish thesis I can come up with is that this is a diamond top formation. Which it very possibly may be, but would need to take out today’s low to confirm a reversal. So we will watch that closely.

The bullish thesis is as follows.
1) On the larger picture, A cup/handle formation targeting ~2400. This has not triggered yet, but also has not been invalidated, so it must be on our radar.

2) On the lower time frame (30 minute), we are forming a cup/handle as well, which is a pattern within the handle of the larger pattern above. Taking out the April highs will put this in full motion targeting 2163 which is a new All Time high.

3) Let’s also keep an eye on this potential inverse H&S on the DJIA.



The Bottom Line:
I am not predicting a breakout. However, the problem for the bearish thesis is there is there really is nothing bearish on the radar beyond what is possibly a diamond top formation. Additionally, there is far more bullish price action than bearish price action in the charts I am looking at. We all know that can change, and we will react to it, but to just short blindly into an uptrend is not my strategy. However, I remain flat and cautious here mainly because we are too close to resistance to be pressing long, and no evidence of a reason to be short (yet anyway). I will let the market digest and decide where it wants to go and join it. As I always say, no edge, no trade. However watch the price action described above to see if any of these mainly bullish patterns can trigger. 


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