IBD says we're in a confirmed rally. The last time they said that, the following week carved out lower lows and the markets took a plunge. The basis of their bullishness is that the market demonstrated remarkable resilience in the face of really bad data. IBD says Tuesday was a follow through day and Wednesday/Friday were accumulation days with leading stocks building gains on healthy volume.I don't quite understand that Tuesday was a follow through day, it looks like a retracement on the S&P 500 chart above. Anyway, on Wednesday, we said that if the market could end the week relatively unscathed after all of the weak data, it was a plus for the bulls and the bear market bounce would be intact.
A close look at the weekly chart shows this week's action carved out either a hammer or a hanging man. Hanging man needs confirmation, so we'll soon find out.
The VIX is coiling within the symmetrical triangle. Coiling usually precedes a big move, so we'll be monitoring the VIX closely for direction.
4 comments:
Does a hanging man/hammer must come at the apex/nadir of a trend?
Most examples of those candles usually involve them at the cusp of a trend reversal.
TeamIram,
Agree, most hanging men come after a thrust and foreshadow a trend reversal. Perfect case in point 08-22-2008 SPX carved out a hanging man on weekly chart as part of a bearish flag which, eventually precipitated one of the biggest declines in stock market history.
I'm pointing this one out just so that we don't take anything for granted. It will most likely resolve itself as a hammer because we've already taken out the previous 2 week highs this morning.
Ah ok ok, thanks for the quick response! I guess IBD deserves some more credit?? hahaha
Ha! Yes indeed, IBD deserves a lot of credit, because the last time they said we were in a confirmed rally was right around 8-22-2008.
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