With this morning’s push, I’m abandoning my shorts at 1395, with the plan of re-establishing them at 1404. But, I’m not excited about going long at this level. So, I’ll return to cash and await a sell signal, ideally at 1400-1404.
UPDATE: 9:50 AM
Here’s a better look.
And, the same chart closer up.
There is still a lot of ambiguity in the charts. Much of it stems from the sloppy channel formation on the upside. This sort of thing can happen with low-volume rallies that are manufactured on an unstable foundation.
I’ll strip away some of the clutter to better show what I mean. The chart below shows two distinctly viable channels.
The purple one has been the one we’ve focused on the past several weeks (with endless tweaking), but what if it’s the white one in play? The bullish implications are clear — as the white channel allows up to 1410 today. The purple channel’s gentler slope doesn’t even reach 1404 for another couple of weeks.
And, if we were to include all the shadows, we have a third possibility as well.
For charting purposes, we’ll stay with the middle (white) case for the time being. The purple channel has been broken — even if only intra-day. And, the yellow channel hasn’t yet earned its stripes with a mid-line tag or whatever.