Monday, February 9, 2009

Do-ji, Don't-ji

Pretty lackluster trading today to say the least. The S&P 500 traded in a dismal 12 pt. range and ended the day forming a doji candle. A doji is a potential reversal candle which conveys indecision and a stand-off between buyers and sellers. The S&P has reached a resistance level at 870 formed by its prior pivot high, furthermore we are reaching somewhat overbought levels (click on pictures to enlarge). The question to consider going forward is whether or not today represents a ‘pause that refreshes’ or the start of a reversal into a down swing.

As mentioned in last Tuesday’s post the relative strength in the technology sector has continued. Take a look at the comparison chart and price charts. Many of the big tech names (AAPL, GOOG, RIMM, AMZN) have formed higher pivot highs and may be candidates for bullish entries on the next retracement.


3percenter said...

So it looked like a pretty symmetrical triangle forming there as of Friday, today it pierced the upper but was unable to follow through, probably due to the 50 day ma bearing down on it. Is that what you're seeing?


Tyler said...

Yeah. Could be a combination of the 50 MA plus you've got resistance at 870 from prior pivot high. As far as the symmetrical triangle, I'm seeing resistance around 895-900 ish based on the upper trendline. It kinda depends on how you draw the triangle though. Tomorrow should confirm whether we breakout above 870 or start the next down move.



Nice charts again.