Yikes!

There were a lot of inverted hammers and dojis today and I haven't even started to count the long black candles yet. Hay! We were up around 18 points near the start of trading but we corrected soon after with only a shallow mid-day rally. We really are negatively correlated with the Dow! Hmm.. I'm bullish on the Dow, so what does that mean for our market? For our market's sake, I hope my reading on the Dow is wrong. :P 

In the chart below, we can see that the head and shoulder pattern people were so scared of failed when the Dow broke above its downward trend line this September. Usually, failed bearish patterns are very strong bullish continuation patterns. Focus your attention now to the wide trading range that started mid-June until today, then to the narrower and sharper uptrend this September. This should emphasize resistance at current levels. I can see two scenarios: an acceleration to the upside or a retest of the new support at 10,400 (downtrend line starting late April) or at least 10,640. In my opinion, the Dow should have followed through on its gains last September 24. The fact that it didn't is a bit worrying for me. 

I was talking with another trader about the Dow. He showed me a survey asking what people thought of the Dow, is it headed higher or lower? Around 70% answered "higher". This is from the same group that released a survey earlier on, around late last August, that asked "What will the Dow will reach first? 9,000 or 11,000?" Majority were bearish, answering "9,000". The market formed a bottom then and rallied to current levels. Contrarian! So, what does this say? If we go against the crowd, we can say that the Dow is headed downward. In this case, we might actually see a retest of support rather than an acceleration to the upside. My trader friend was shaking his head and said he doesn't expect support from the Dow. Since prices are currently high, the resulting bearish Dow movement may influence investors in our market to sell. Of course, we were just discussing the possibilities. We'll just have to see. 

Wait, wait, wait... I'm deviating! We don't trade the Dow! Back to the PSE! I haven't finished looking though everything yet but I did notice some pretty interesting stocks today: MWC and MER. Waaah! MWC!! Melvin gave me a heads up on that last week. I bought this issue the same day I bought ALI. Like I said, I was lacking in resolve so I sold the next day! *grumble*grumble* Retest of all time high of 19.25, coming!! :P I bought some ALI today too. I'm a bit bullish on ICT and FPH as long as support holds. 


BTW, got any questions? Feel free to ask me about Philippine stocks or whatever that has a chart. :-) I'd be happy to help. You can comment here or post it in the guestbook.