Technical Stock Market Forecasts for Swing Traders
Monday, November 15, 2010
A failed rally attempt
Today we saw an attempt at a rally following last Friday's negative action. Things were looking good until around 2 PM when all the day's gains evaporated leaving us with a gravestone doji. However, note that while a GS doji in an uptrend is a bearish pattern, a GS in a downtrend is bullish. Note also that the indicators are starting to look oversold. The RSI in particular has declined to its lowest level since last August just before the big uptrend began. But volume today was lighter than yesterday. Go figure.
In addition, we remain firmly in the descending RTC established on 11/5. On that basis alone, I have to leave the red trend arrow in place. So where does this leave us? The bullish gravestone doji is a pretty rare pattern. I went back through 10 years of daily Dow charts without finding another one like today's. The next support level int he Dow is at 11,150 and the lower Bollinger band isn't til 10,971. Today is one of those indecisive days where I can't figure out which hat to put on tomorrow. Either the bearish RTC trend continues, or we see an uptick motivated by the GS doji. There's really no way to tell so I will continue to stand aside.
Today I bought another 100 shares of DHY. I figure for a total investment of $293, how wrong can I be? Other than that, I will wait until I see evidence of a turnaround before committing more money to this market.
Michele is a swing trader, a night owl, and a student of Japanese candlestick charts. She retired from a large tech company at the age of 50 and has now been trading US stocks and occasionally the e-minis on a full-time basis as an independent trader since 2004.
The Night Owl Trader publishes every trading day late at night (or very early in the morning) around 1 or 2 AM, with occasional bonus commentary and analysis thrown in on weekends.
The Night Owl is independent, ad-free, and made freely available to all. Contact me at nightowltrader (at) gmail.com.
BB - Bollinger Bands COT - Commitment of Traders Report DCB - Dead Cat Bounce MA - Moving Average RTC - Regression Trend Channel YTD - Year To Date
(My lawyer made me do it) This blog is not trading or investment advice, account management or direction. All trades listed here are presented only as examples of the author's personal trading style. Investing entails significant risk and trading entails even greater risks. Act accordingly.