Wednesday, June 22, 2011

Stocks Come Under Pressure

As of yesterday I've been leaning  back again towards the bearish side in the stock market as I think we will see a retest of the recent lows.

Above is a 60 minute chart of the NASDAQ composite and in the lower panel is the stochastic indicator. As you can see the market is in a downtrend and the way to make money in downtrends is to short the rallies. In my comments from yesterday I said I shorted the market lightly and would add on confirmation which I believe we saw today.

My reason for shorting yesterday as well as today is because the market has rallied right up into a downward sloping channel. The stochastic indicator is also in an overbought situation which in the past has identified some outstanding shorting opportunities as can bee seen in the above chart.

Whether or not stocks will go down from here remains to be seen but so far it seems to me that the market is telling us to get short again. We'll see what happens.

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