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.
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.
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.
