Classic ‘buy the rumor-sell the news’ action we saw today, where as soon as Geithner started talking, the Dow began dropping in 100 point clips. Which is exactly the same response that we got when the last stimulus bill was past late last year. The Nasdaq was due for a sell-off as it was treading in unfamiliar territory: positive territory. But that’s not the case any longer, and now we have a technical setup with a near-perfect, symmetrical wedge. When this formation busts regardless of the direction, it is likely to break hard.
The consolidation pattern that we have been in for nearly three months looks to be coming to an end and if we have a breakdown, we are going to test the lows from last year if not create a whole new entire leg down. If we instead get a breakout, this could be the clear signal that we may finally be putting in a bottom. Either way, it will be a huge trading opportunity. So hang tight!
Here’s the Nasdaq and S&P charts…
