,hl=en,siteUrl='http://0ldfox.blogspot.com/',authuser=0,security_token="v_SeT2Tv8vVdKRCcG9CCW-ZdIfQ:1429878696275"/> Old Fox KM Journal : Sam Collins Analysis

Thursday, February 21, 2013

Sam Collins Analysis

The reaction to the Fed minutes led to a bearish key reversal day (KRD) for the Dow. This signal is characterized by a daily bar that reaches a new high, and then turns around to close lower than the previous bar.
Most technicians accept that this pattern is notice of a pending market decline. But there are some who would say that it signals a “market top,” because there are many examples of a modest pullback after the signal followed by a resumption of the major trend.
Conclusion: The Dow was the only major index to flash a bearish KRD even though most came close. The S&P 500’s highs on Tuesday and Wednesday were identical at 1,530.94, just 0.01 points away from a KRD. The Nasdaq missed a new high and thus a KRD by just 0.35. 
Nevertheless, the stock market is still extremely bullish, and following a modest pullback, should make a run at another round of new highs. But the short-term trend is now down, and traders should be executing bearish trading strategies. Long-term investors should sharpen their buy under prices and grab bargains as the market retreats for what could be a 3%-5% pullback. 
Initial support for the Dow was its 20-day moving average at 13,940, but that was penetrated Wednesday. The next support is the line at 13,860, then the major breakout line at 13,653, and finally, the 50-day moving average at 13,569.

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