07/09/10 BullBear Weekend Report

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Permalink Reply by Steven Vincent on July 18, 2010 at 11:46am

It's not too often that a chart pattern comes to me in a dream. So when it does I pay attention. Here's another possibility for the current market situation. We may be looking at a diamond formation. Here, the expanding wedge transforms itself into a symmetrical triangle forming a diamond.

1044 would act as support again, with several higher lows and lower highs to follow. This would of course fulfill the market' primary mission: to vex. frustrate, perturb and otherwise drive utterly insane the maximum number of market participants for the longest period of time.

According to Bulkowski, since the pattern is being formed at a bottom, it stands a 70% chance (should it form) of being a reversal (bullish) pattern. http://thepatternsite.com/diamondb.html

I have seen these turn into continuation patterns however. See also http://thepatternsite.com/diamondt.html

I also note that after a single day's trade the bears are back out in force and are CONVINCED that this is finally IT and the stock market APOCALYPSE begins NOW. Such overconfidence is rarely validated by the markets, at least not without an interim period of vexing volatility. To be sure, they could be right. But I wouldn't drop my guard and relax into a short position just yet.

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Permalink Reply by jeff gomez on October 17, 2010 at 6:42pm

I still am not getting your tweets

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