The Futures trading today and the action overseas seems to suggest the markets will crash this week. The market appears to have completed a bearish rising flag formation. This should mean a renewed move down somewhat equal in length to the initial move in early August 2011.
The BOT Long signal I had sent out was an attempt at identifying a breakout from the symmetrical triangle and a back test to the support of the triangle. This appears to be a false pattern since now the symmetrical triangle will turn into a busted pattern setup. So we should see hard down prices all this week.
The monthly tape seems to be overtaking the weekly tape at this point. We had a hammer reversal on the weekly last week and the monthly is not in full crash mode. So it would seem the worst of the decline should occur over the next two weeks.
The monthly bear signal is the one that seems to be ruling the court. The recent volatility we saw over the last few weeks is simply price moving against the trend. The monthlies are the dominant power at this point that continue to suggest ‘buy and hold’ to the downside is the proper approach.
Of course at some point that will stop working, probably when RSI gets oversold enough.