There exists several possible hanging man candlesticks on several indices as of the close today. The nasdaq composite in particular has a very potentially bearish looking hanging man candlestick. It also has a red real body. Hanging man candlesticks are points in the market that offer potential turning points however they are not bearish until confirmed. We need to see a close under today’s low to confirm the bearish hanging man candlestick setup.
Despite today’s huge rally it still seems as though there is some bearish potential. We are coming into the end of this week cycle date which is a 16 + billion year cycle and possible important major turning point for the market.
From a psychological perspective one cannot avoid the possible thought that we are in a ‘buy the rumor and sell the news’ situation. The market has rocketed higher on the rumor that the European leadership is going to shore up their banking and debt problems. So now once the ‘news’ is officially delivered it may be a case of ‘oh gee… now what…?” and we could see the markets plunge on the news and take a wait and see attitude again.
Still, the dividing line is 1250 in the sp500. If we see 1250 breached to the upside and sustainable closes above that range then I will have to remove my bearish outlook and keep open minded towards bullish ‘new highs’ possibilities. But if we continue to fail UNDER 1250 then this market is going to be in big big trouble and we would then likely see the next major leg down in the markets unfold.