Wednesday, April 22, 2009
ES Daily Struggling To Close Below The Rising Wedge.
You can clearly see the channel up off of the 667 low. Then we get into the debate of a diagonal or rising channel from there. The bull argument is that the lower low just extended the diagonal and the daily is struggling to close under the trend line and until the channel breaks we're still headed up. The bear case is that the indicators are showing clear sell signals and that the diagonal is ending or has ended (choose your diagonal). Market sentiment is still short term bullish IMO. Bulls are putting up a good fight and with the banks apparently solvent (as far as we are told) and a sprinkling of good earnings the market is still levitating.
As you saw Monday the sellers are ready to leave if given a reason, and they are ready to leave in a hurry. This will be the case IMO. Any selling momentum will foster more and it could get ugly for a day or two (impulse waves down) while the correction lasts till the Stress Tests are released early May I'm guessing at this time. I'm looking at the lower channel line and then a break of the larger channel 50% line (the top diagonal red line is the 1007 to 945 top line) to mark any significant move south. These occur in the 815 support area. 768 is the 50% retrace and that is my target for this pull back at this time.