Wednesday, June 06, 2007

Inflection point...

If we get a gap-down tommorow again, it could be a VST buy, but it would clearly break that controlling channel on the 120-min charts. So those betting on a irregular flat correction will have to give up. The controlling trendline from the 3/16 lows is already taken out. If you are a blind bull, then that downthrust in the NYSE and Nasdaq MCO may not mean anything.

Let me tell you something. If the uptrend is alive, the market will start going up from the get-go tommorow without breaking below that cahnnel, as though no technical damage has happened and will never look back. A close on 120-min basis below that channel tommorow will be a high odds signal that we are looking at more than a VST correction with much more downside to come. The summation on both the NYSE and Nasdaq has turned down. The breakdown in the MCOs do not look like a hesitation pattern, but looks something decisive.

To me any daily close on the ES below 1512.50 would mean that the back of the bull is broken and a multi-week correction is underway. What shape the correction would take is anybody's guess at this point. Clearly we are at a inflection point.

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