Thursday, April 7, 2011

Pull Back

Prices have halted their advance over the last few trading days, with many indexes near their February highs, and some above. The latter (first two charts below) actually give a clearer visual clue as to why to expect a pull back. The third chart has a zone of where my analysis suggests a pull back would end on the S&P 500; either at a slightly higher high from the most recent 15 point reaction, or back to the 1300s for prices to form an inverse H&S.

Another reason to expect a pull back is that the T I presented in a prior post expires tomorrow as well. Today was also a potential reversal day because of the European Central Bank policy decisions. However, I would not sell (short) because there is a possibility of an upside breakout.

All charts are in 30 min bars.

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