Exposing Ideas to the Envelope of Serendipity

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Friday, September 24, 2010

A Day Later

Since blasting above well-established resistance at the pattern neckline in recent trading, I've been watching for a pull-back to test that key level as potential new support. The extremely bullish behavior of stocks in general, but in particular,of market leaders, has strongly suggested that any consolidative or corrective action would likely be shallower and briefer than might seem indicated after the brisk run-up we've just experienced. When you then add to the picture daily increasing numbers of bullish patterns, stocks making new all-time highs, and new base breakouts, you get a recipe for a market poised to move higher -- possibly considerably higher. When on the lookout for a pull-back, I also mentioned that while likely short-lived, a sharp shake-out before resuming the uptrend wouldn't surprise me. Thursday's afternoon reversal and plunge back to the neckline certainly fit the bill, shaking out many longs while luring bears to get positioned short in expectation of a deeper correction. And while that could still turn out to be the case, the continued rush of buying that has occurred on each and every dip shows few signs of abating anytime soon. If we do get a convincing close below major support, it will very likely also be viewed as a buying opportunity sooner rather than later.

Trade well.

-- Brinkley
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