Update: 06/29/2010 5:52 PM EST
No upside follow-through from Friday’s Doji bar on the main indices, and no upside follow-through from GS either.
From a trading standpoint that’s fine as none of Guy’s breakout points were taken out anyway, so it’s a case of no entry, no losses. It’s one of the great advantages of Guy’s way of trading breakouts from flags, channels and even reversals. He never tries to second-guess, and therefore when he’s wrong he rarely gets hurt.
Also, it’s worth pointing out that the Dojis Guy mentioned on Sunday evening were NOT hitting 20+ day extremes. If you’re signed up to Guy’s TradeTheBanks course you’ll know about this particular rule. The reason for mentioning the Dojis on Sunday was that the three majo r indices had Dojis at the same time.
Look at the OVI and the weekly charts though, and you’ll conclude that we’re still very much in a bearish market – and that’s even if we do have a short term bounce.
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Guy Cohen, of Trade the Banks, recently posted these charts and and some insight using his OVI indicator that could bring on a short term upward reversal this coming week. Check out his analysis and the charts below.
The S&P and Dow both exhibited doji bars on their cash indices and their ETFs on Friday. The Nasdaq index did likewise while the QQQQ didn’t. GS had a great day on Friday with the stock poking above $140 and the OVI creeping above zero.
DIA (Dow ETF) Chart:
Clear doji bar here. OVI still just negative. A break above Thursday’s high could be short-term bullish.
SPY (S&P ETF) Chart:
Same for the SPY. A break above Thursday’s high cold take us to 113+.
QQQQ (Nasdaq ETF) Chart:
The QQQQs aren’t displaying a Doji, but the Nasdaq cash is …
GS Chart:
The financials often show the way forward. GS powered up on Friday and the OVI made it to positive territory for first time since April. Need a clear breakout pattern to take advantage. Potential breakout zones marked by the green dotted lines.
In short, there is a good chance for a short-term breakout to the upside. To learn more and have access to the OVI visit Guy’s Private Traders Club area.