Tuesday, October 16, 2012

Signs of strength, but pullback probable

Success so far, pullback probable                        New Poll ------------>

We have enjoyed a nice market pop the last two days, as I predicted over the weekend.. I'm just sayin'.  However, the RumWave chart is meeting a specific resistance point.  Looking back at short term market bottoms over the last 4 years, most of them have bounced off this RumWave resistance point to the downside.  Sometimes the market makes a new low while other times it doesn't.  What I'm getting at is that we should expect a little giveback tomorrow.  For that reason I sent out an email to my friends recommending they adjust their stops to accommodate their individual risk tolerance.  I personally set my stops to my entry points, meaning the worst I should do is break even if there is some kind of large collapse.  If my stops don't get triggered I'll just ride the wave higher.  Good times!

Today's scores:

In the score chart above we can see that the 4 hr chart turned a burned orange (go Texas), indicating that we are overbought.  The Daily chart is also turned orange.  The RumWave is still green which supports the concept that a small pullback is probable while the longer term (talking 20 trading days) still looks to be intact... for now.

Today I noticed a bullish divergence on the 1 hr DJIA chart (yellow lines).  This is a sign of strength in this particular wave, but do take notice that the slow stochastic is at high levels and is about to cross.. a sign of very short term change in direction.

TSP GAMEPLAN:  If you are in the C or S fund, stay there.  If you are not, stay in the G fund for a little bit.

Questions, comments?  Email me: rumwavetrading@gmail.com

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