High caution is still warranted right now, as the S&P, DJI, and NYA
have not been able to
penetrate their Wedge's resistance levels after
trying for a week.
This first chart below shows the
S&P and how it has kept on attempting to rise above
its resistance
line, and still has not managed to do it yet. A failure in this attempt
to the
downside would be very negative for the S&P.
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If you were
not watching the Transportation Index yesterday, it got walloped.
We have
pointed out for some time that a Head & Shoulders pattern may be forming
here and
labeled it weeks ago. If this is what is happening, then
this index could be looking at
a 400 point downside.
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The NYA Index below
may also being forming a Head & Shoulders pattern.
There still is a chance that it could move up to the next higher resistance
line drawn on the
chart, but right now, its has not successfully passed
the current resistance line.
Caution levels are
elevated along with risk at this time.
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