Market Wizards

Many traders were caught unprepared by the strong market move since March 21 signaled only by a bullish divergence in RSI from the chart ( we caught the bullish divergence in our post March 20 Sunday ). Initially, they thought the rally was not sustainable and did not participate. Then as the days go by, they worried their late participation may result them in joining a party that is ending soon. If this is your dilemma too, you will be pleased to know the party has not even started yet. The market has just begun to turn bullish and more upside is expected (after some near-term profit taking sessions) based on a strong buy signal generated in the Point and Figure chart below :



Unfortunately, a price objective cannot be determined until the market pull back by at least 30 points where a new column of "0" is fixing the current column of "X" ( these are Point and Figure jargon ).

On the daily candlestick chart, Friday closing has faced resistance at 3,120. Stochastic is very overbought. Volume is getting lighter the last three sessions as prices continued to edge higher. All these are signs of short-term weakness signaling the possibility of a few profit taking sessions ahead.

At the backdrop of a fresh and strong Point and Figure buy signal and that the index has regained control of the 200 MA. Profit taking sessions become good opportunity to buy the dip.

A breakout from the symmetrical triangle did occur. What we may see is a few sessions of profit taking bringing the prices back to touch the upper trendline of the symmetrical triangle. As long as the prices do not dip back into the symmetrical triangle, this will provide a 2nd chance for late comers to take advantage of the triangle pattern with a long term target of $13.50.