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US Markets like Dow Jones and S&P declined during the pre-market yesterday. I issued a red flag warning to myself that the market is going down further because I saw the S&P broke the key support .

Luckily the market pull back and it rebounded, close higher and form a white candle instead for 2 consecutive day.

So, where is the market heading to in the 2nd half of 2008?

Looking at the immediate trend, it is still a down trend formation, we should continue to watch closely on the support of S&P500 at approx 1270 and the previous low of 1257 on Mar 17. That will be a good time to short using break out strategy if it break the low and support.

As we see 2 white candles formation and the market looks oversold using RSI. There is a possible chance of rebound. You may ask now, is it a good time to Long?

Well, I won’t long at this time because the risk is high to open a position that is opposite of the market trend. The immediate trend is still DOWN DOWN DOWN. In this market condition, the market can reverse the rebound and head down further ANY TIME ANY TIME ANY TIME. I keep repeat that to emphasize the risk of DOWN trend ANY TIME.

So, it will be wise if we wait a bit, let it complete the rebound and we open the short position when it formed a lower high then. The short position coincides with downward immediate trend and the risk is lower.

I did a screen on NYSE market using my bullish candlestick rule. I found 296 counters form the bullish candle today. Well, that strongly suggest that there is some bullish sentiment in the market now which can lead to a rally, but I think it is only a Short Term Technical Rebound. For a position trader like me, I do not like to chase technical rebound in a Down trending market. I prefer to follow the trend and hold my bullet despite having 296 counters for me to pick…
DISCLAIMER: This information is used for learning purposes only. It does not constitute an offer or solicitation to buy or sell. You should do your own analysis on top of my postings.