Homework for Monday 2008.12.08

5. December 2008
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ESZ8 - After Friday's wide trading day and surprising bullish close, we are left to wonder what is next.  From the teaching of Oscar (http://www.livewithoscar.com) a formation was brought to my attention: the Bearish Diamond Formation (more info).  Typically these occur at market tops (which we are obviously not at), but it is still bearish none the less.  The chart below helps show what next week may have in store.   You can also see that 34 volume weighted MA (maroon line) coming in as well.  If this market was going to rally any further, it has to break up hard on Monday (above 900, which is above Friday's high, above the 34 MA, and above the previous swing high).  I don't the market has it.

The CCI has also returned to the zero line, thus a zero line break wouldn't be surprising.  The stochastic is just about over-bought.  Both bearish signs.

I am going to cautiously look to sell Friday's highs and the 34vw MA (879-883) on Sunday afternoon.  On top of that, I have a gann line at 882.50.  Good hunting! 

Homework

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