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Head, Shoulders, Knees, and Toes

By TheMoneyMaven ⋅ Email This Post Email This Post ⋅ Post a comment

Everybody betting on the Head and Shoulders pattern developing in the market and at the same time it is working. I think this is one of the few times that a pattern so widely known is actually carrying out. But like they say, knowing is only half the battle. The key is can we execute and make a profit off the technical analysis. Today’s reversal caught anyone who thought today was the day to initiate shorts.

S&P Head: 950, Shoulders:888, Knees: 875, Toes: 825
For the Head and Shoulders pattern, everyone forget that we have to break through the shoulders (touching the knees) then revisit the shoulders before our final flush down to the toes. Today where everyone thought we would make a strong march down to 825 forgot about the pullback. See the image here

I have been short since last Thursday and took my Baidu (NASDAQ:BIDU) shorts off at the 50 daily Moving Average (268) where I saw support. I then noticed an intra-day double bottom forming on the XLF and went long Goldman Sachs (NYSE:GS) into the close. I have been doing a lot of researching and I think this market is going to give us a nice whoosh down starting Friday and ending next Tuesday which will be the low for the next couple weeks. So that means I will be out of my GS position tomorrow, which is already up 3 dollars. I am looking to get back in my BIDU short as I think it will move the fastest to the downside. I will update everyone over the next couple days mostly via twitter. Until then, trade well!

Posted on July 8, 2009
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