Dear Readers, futures are up about 100points before trading commenced on Tuesday. Charts are increasingly pointing to a double bottom formation, at least for the short term. However, I am mindful of the gap created by the gap down on Tuesday 18 Aug 2011. As we all know, gaps served as resistance or support. In our case, it is the former. See charts below.
If you think this is going to be a short term double bottom and you have the itch to go long, then you could buy with a tight stop loss just below the low of these 3 weeks. I would suggest taking some profits off the table if the price action nears the resistance area. Of course, this does not mean that for sure price action will cease to go higher at the resistance area. We can add more if price action closed above the gap and move higher from there. Remember that anything can happen in the stock market so never say never. Trading is so dynamic and such is the beauty of the stock market.
AIG
General Electric
Goldman Sachs
CAT
At this moment, the trend is still down unless proven otherwise.
If you think this is going to be a short term double bottom and you have the itch to go long, then you could buy with a tight stop loss just below the low of these 3 weeks. I would suggest taking some profits off the table if the price action nears the resistance area. Of course, this does not mean that for sure price action will cease to go higher at the resistance area. We can add more if price action closed above the gap and move higher from there. Remember that anything can happen in the stock market so never say never. Trading is so dynamic and such is the beauty of the stock market.
AIG
General Electric
Goldman Sachs
CAT
At this moment, the trend is still down unless proven otherwise.
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