Wednesday, January 11, 2012

Exciting Wednesday.

The correction in stock market is coming for sure. Please emphasize on the word “correction”. It should start today but for whatever reason if it does not, don’t be disheartened, assuming you are short. In the worst case it may make another attempt to revisit the high of yesterday. But long term resistance is in place which will be very difficult to break in this attempt. I cannot find much upside but stock market is its own master and does not listen to me.

Let us look at the DOW chart. I have drawn a trend line, touching various points.
It closes exactly at 12515. And Dow touched that point and came back. The resistance at 12500 is huge. Dow has formed a symmetric triangle and only place left is down.

Same situation with SPX. The trend line resistance is at 1292 and there the SPX turned back.  It made a kind of double top (high of 10/27) but a close above this level will take SPX to 1305 not much further.
Although we are looking for a correction but the bull is not dead and gone. I will write about that around January 20. Before that we have some unfinished business to complete. Let’s see how it goes today.