Happy Halloween.
While everyone is trick or treating tonight, Wall Street might be celebrating the holiday twice this coming week. One for the elections and the other for the FED's policy meeting. Both announcements should bring some added volatility to the market. In anticipation of these events, the market has meandered in a sideways affair for the better part of two weeks. Currently I am anticipating another recovery high as the wave structure from 10/25/2010 has been in three waves. One could speculate that the new recovery high would be struck right after all the "news" is out. When this coinsides with the wave pattern, a powerful "sell the news" event might be in order as bullish optimism reins. This would be in line with what typically transpires at market peaks. Throw in lagging momentum, UPVDV and NYSE ADVDEC oscillators and its clear that the market lacks the strength to maintain a sustained rally at this point. Therefore any further strength should be short lived.
Here's the market's position as of 10/29/2010:
Momentum: OB on Weekly, Daily and 60 min charts.
Pattern: final wave.v of wave.c of wave.2
Time: No change from previous comment.
Trade Strategy: Remain flat past news events but looking to establish a bearish position as 60 min momentum indicator makes a bearish reversal while price and the wave count confirm a top is in place.
Best of Trading
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