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Noel Campbell In an article a few weeks back I related the SPI200 to being one of those monsters in a good horror movie. Each time you think the beast is dead, it manages to rise again and wreak further havoc. Now whether you see the resurrection of the beast as a good or bad thing depends on whether you are a bull or a bear.
Let's take a look at the similarities between the lead up to each resurrection. The first chart shows the market action following the first solid time and price set-up in October. You can see where the market gapped down through several lows and looked set to break away to the downside. The reality is, that day turned out to be oversold, the market gapped up on open the next day and powered up for the entire session. Basically the same market action followed for the next 2 or 3 days until the top was broken without a reaction.
Chart 1
click chart for more detail
In Chart 2 we have a close in view of the market action following the potential set-up in November. Once again you can see where the market gapped down through a swing low and looked ready to go. History though goes on to show it was again just oversold, gapped up the next morning and powered up through the top in the next couple of sessions.
Chart 2
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Last we are going to take a quick look at the chart of the latest market action, following the next potential set-up in February. Chart 3 shows the daily bar chart action for the SPI only missing today’s data (1 March 2005).
Chart 3
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Aaron Lynch and I were running a 3-Day Trading Workshop last week and after seeing Friday’s market action and remembering the outcome in October and November, we both agreed the writing was on the wall. Cover your shorts and watch out for the main trend to continue for now. The beast is back, for the time at least.
Until next week......
Noel Campbell
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