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.
