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Moment Of Truth: At The Upper Range August 16, 2014

Posted by Tom in Thoughts.
Tags: , ,

This is a very busy weekend for me so it will be brief and to the point.  What do we see in the chart below?


Prices on Friday touched the upper Trading Range channel, the Money Flow Index improved indicating money coming back in; all positive.  But . . . note the below average volume (lower chart) over the past 5 days.  Prices at or above the previous range high on below average volume: characteristics of a UTAD (Up Thrust After Distribution) in Wyckoff terms (bearish).  Now, I’d be more concerned IF we had a cleaner Distribution structure in back of the possible UTAD, but I really don’t see it.

Hence, I’m still feeling that we are in a summer Trading Range here and this is likely a Re-Accumulation structure.  The Moment of Truth will come next week when either we break solidly up above or bounce off that upper range.  IF we bounce off that upper range, AND have solid wide spread down bars on high volume, that will indicate Liquidation and confirm the UTAD (bearish).  The market would then head lower.

Now I’m aware that some of this is caused by geo-political issues but watch how the market participants react to the news.  If I told you there would be a Russian/Ukrainian and Israel / Gaza and an Iraq crisis all at the same time this summer, we would have all bet on a much lower market.  But it has not (yet).  Looks like a pretty strong market in view of all of that.  Stay Tuned, we shouldn’t have to wait much longer.

Have a good week.   ………….  Tom  ……………….

chart by MetaStock, used with permission. click on graphics to enlarge


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