Big day in the market today, but there is a number of questions in my mind that looms, casting doubt on the legitimacy of today’s rally, both from a daily perspective and an intraday perspective.
On the daily charts, you’ll see that we failed to recapture the psychological 1200 mark that the markets need to close above – attempting, on three separate occasions, to no avail.. However, the S&P did take back the 20-day moving average, but barely did so by three-tenths of a point…Hardly convincing. You also have a quasi morning-doji candle that was created but is somewhat deformed and not as clean as I would have liked to of seen.
On the intraday charts, the picture is even clearer – you have a definite head and shoulders pattern that was confirmed on the five minute charts, and an attempt at the end of the day to rally back, but instead closed just below the neckline. And like the daily chart, the head and shoulders pattern coincides with the inability of the markets to break 1200.
So you have to be careful in the morning when the markets open, a lot of traders will go to bed tonight thinking that the selling is over, but I think it is a bit premature to think as much, as the markets did little to convince me of anything different.