Today was a "gimme" for the day-traders. And probably for the swing traders - those people trading on a two-six day time frame.
I'm not so sure about the rest of us.
Certainly we had a "reversal" candle today. Remember on Friday I said to look for a "long-legged doji" to indicate a reversal. That's what we got today.
I thought that recent activity would be a simple ABC correction to wear off the insane overbought condition of the market. But recent action looks much more than that. The past week the drive down has been unrelenting and impulsive. The sort of action which occurs at major market turning points.
So today - we had a reversal candle. We now wait for confirmation. A strong up day. How long will it last? Probably long enough for the swing traders to make a profit. But it might be a good idea for others (long term investors) to think about lightening up positions if we get a few good up days.
If you look at the weekly chart - you'll see my concerns.
If you're a fundamentalist - then you'd have to be concerned about the impact on world growth of the devastating earthquake in Japan. Such events produce winners and losers on the stock market. But the net effect is a loss maker.
To assist the disaster relief for Japan go to:
http://www.redcross.org.au/japan2011.htm
Good luck
Red
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