Take a look at the Dow Jones weekly chart below. Notice that this week bar still has an upward bias due to a higher high and a higher low with the low still at the upper range of last week green bullish engulfment bar (my version- not counting candlestick tails). If today was another big down day; we would have a red weekly bar with a low that fell into the bottom range of last week bar which would exhibit a downward bias. But we didn’t have a big down day to continue the pattern of yesterday bearish engulfment bar.
To me, a failure to continue on the path of the engulfment bar is as much a loud message as a continuing trend bar. Since engulfment bar has a high probability of continuing; its failure to continue the trend in the next day means that there is a very strong opposite force come into the play. This opposite force cannot be discount and can possibly change the direction of the trend. In our weekly perspective; I believe we are still on track for our price action to head to the area (B). I expect we may see some resistance at the 13,136 area; if price action could not penetrate this resistance, a downward trend may begin to complete wave C of this correction wave.
Since it looks like we are heading to point B to complete wave B, I’m feeling positive about moving 35% of my cash into equities today. I’m always about 20%-25% invested in the visionary portfolio that I don’t trade with; thus, my 35% additional investment today.
Good Hunting!
