Friday, October 31, 2008

Stocks Close The Week On A Positive Note



Even though I've been bearish on stocks for the past few months I must admit this week's price action appears to be somewhat bullish. In the above weekly chart of the S&P500 (SPY) you'll note the bullish engulfment pattern that has formed. In fact, all the major indices have bullish engulfments which indicates to me that we may see a rally take place.

For those of you who are not familiar with candlestick charting formations I'll tell you this much, bullish engulfment patterns are reversal formations. The fact that this pattern formed after successfully testing the low from 3 weeks ago increases the probability of a rally in the weeks to come. The bullish pattern will be confirmed if the high of the week (98.57) is take out next week. As always, we'll see what happens.

2 comments:

Anonymous said...

Kevin

This still looks like a developing triangle as you mentioned a few days back.

They usually break in the direction of the major trend (down)

Do you agree?

Kevin said...

No..I'm going to hold off shorting at these low levels. I think we are going to see a bear market rally take place in the very near future.

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