going too far - friday, page-8

The sharp rise in the XJO yesterday took it right up to the midline of the fork that covers the past three months trading. So I expect considerable resistance around this 5200 level. What would be good here would be some trading over a number of days to gradually minimise this resistance. If that happens then we should be able to see the uptrend continue. What worries me though is that if we roll over here over coming days and start to head down again, then this rally would look more and more like the right shoulder of a head and shoulders top with a downsloping neckline – a particularly ominous pattern.

Obviously the overall trend will be governed by New York. The SPX has now formed three little tops up here just above 1800. If it can ultimately break topside then it will take the XJO with it.

Naaim still above 94%.