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A slower start to the week gave way to full-bore weakness by mid-week, as all indices moved down to
test decline lows. Overall, the indices lost a tidy 2.5-4% as a larger pullback takes shape off the late
October highs as anticipated. As a result, we once again find ourselves at a key point for the pattern
on all time frames.
We’ve discussed how the only way the bearish setup could survive is if a market high was found in this
area and was followed by notable weakness. With price declining this week, this appears to be last
sensible opportunity to follow through to the downside. If weakness does not continue and instead we
get more indecision, we’d have to think that the bearish potential is not going to be realized. That’s
because any waffling here would confirm that the current pullback is corrective, which in turn would
portend higher prices that would completely negate the possibility of a significant downtrend. Either
way, it sure looks like an important statement is going to occur here, and we’ve get the levels that will
translate the market’s message for us.
Tonight, we’ll take a detailed look at all of it to fully prepare for the market’s pending statement. One
thing we do have to keep in mind is the impact of low-volume trading, a certainty in the coming
holiday-shortened week. Fortunately, our neutral stance allows us to simply wait and see how it goes.
After we break down the indices from every angle, we’ll take a gander at this week’s stock board
action. There is no lack of tasty patterns out there, but they sure could use some followthrough.
 
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