Saturday, July 30, 2011

Possible Confirmation of New Downward Pattern

Click on Chart to Enlarge

With the continuation down on Friday, the decline off the recent swing high completely retraced the prior upward swing. However, it took slightly (a day) longer on the chart. Even so, I take this as possible confirmation that the pattern noted recently has completed. If so, then we are likely to see downward fireworks this coming week. Obviously there is the potential for a shake-up with the political/debt ceiling vote happening. Additionally, there is the possibility of a head and shoulders top forming on the daily chart here. The breakdown below the neckline should occur on heavy volume, and again the chart and "climate" are ripe for a possibly high volume breakdown.

The market found support at the 200 day SMA again Friday and rebounded a bit off of it. See the chart above for notes. This reaction to the 200 day SMA was weaker than the prior 2 successful rebounds.

I don't think there are any high probability low-risk index trade entries right now. Better to wait for a reaction one-way or the other first I think.


  1. Are you still feeling good about that SLV short? What do you think is a better choice at this point: the SLV short or shorting the S&P (via an inverse ETF)?

  2. I definitely think the SLV short has a more sound rationale on almost every level. As long as the recent high holds, I like silver short. And I would like it again at a later time if it rallies up a bit more and forms another top reversal.