Beware the BEAR

OK I know everyone is gung ho about the last few days with the news that has come out and offically we are in a good upswing possibly a bull trend coming. I mean three days of gains how good is that and rare!

I am going to have to disagree and here is why…

The Bearish Rising Wedge Pattern that is forming on the S&P 500 and on the DOW.

Check out the DOW here -

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OK notice the resistance line I have drawn and its angle. Also notice the support line and its angle. It is forming a wedge which increases the pressure of the price of the index. This also comes after a sharp downward bear trend from the highs in May to the low in June. This is known as a continuation wedge bearish. Now it has not fully formed yet, however we are also experiencing a reduction in volume over the same time that this pattern is forming (of course we are, it is summer) which confirms the bear wedge formation. So I am waiting until this pattern is broken before trading and if the pattern fully forms and it breaks to the downside we will be bearish for as long as it took the wedge to form. In this case two months!

Now to avoid this pattern the DOW needs to break and close above 11,450 and stay there for a couple of days.

So right now I am waiting, doing small trades with quick turn arounds. No conservative credit spread trading here yet. I am going to wait to see what happens with this pattern.

To learn more about the Rising Wedge try Trending 123 for more information.

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