In the daily update on Monday I wrote "The big volume for several days into the low looks like a possible selling climax. That should set up some kind of bounce or consolidation pattern in the short term." We got a little bounce and a lot of consolidation. On a closing basis the last four days netted very little movement. Bulls are clearly not swooping in to snap up bargains. Lets take a look at the 130 minute chart.
I removed the old down trend line and added two new lines. The price looks like a triangle, which are not real reliable patterns as to which way they will break. We held the 60 minute 50 SMA today, but not by much. After four days of consolidation we should be set up for a big move on Tuesday. If nothing bad happens we could get a relief rally. There is still plenty of room for a bounce higher from here. If the market is down on Tuesday the bears may be re-energized with a drop back below that 60 minute 50 SMA
Bob Davis
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