I am not a financial adviser so you should not take any part of this blog as being financial advice. Observing and interpreting charts is a hobby and so is this blog. The information in this blog is just my opinion, it may not reflect reality. Stock market investing is risky - you can lose all, or potentially more than all of your money given certain market conditions. Not only can you lose a lot of money buying shares, you can also lose a lot of potential profits by selling shares at the wrong time. So please do not buy or sell shares because of information in this blog. Whether you buy or sell shares is your decision as is the decision when to buy and sell. Do not risk any money you cannot afford to lose. Do not risk any money if you do not fully know and understand what you are doing.

Tuesday, May 31, 2011

So far so good but bigger trend is still down

The odds are increasing that we have seen the bottom of the market but we can't lose sight of the fact that we are in a solid down trend. The ellipses shown on the chart below show the potential resistance levels for the current rally (about 4850 on XJO XAO (apologies)). They accurately predicted the top of the most recent rally on May 19 (see post of that day). In fact the ellipses are regularly accurate. There's a saying "the trend is your friend - except at the end". So the ellipses should continue to be accurate except when the trend is changing.  I have mixed feelings about this market. The gut tells me that we have seen the worst but the mind forces me to look at the chart and it points to one more attempt at the recent low. For now we will enjoy this little ride and keep both eyes open for a potential brick wall ahead.
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