Archives for June 2010

Will the Nasdaq, Dow Jones Industrial and S&P (SPDR’s) confirm the 1-2-3 Trend Reversal like Blackrock has?

Time will tell, give it another 1-3 months to confirm (September may be the time but I can’t tell you for sure). Wait for the confirmation before taking the short trade. A move above the “blue” line breaks the pattern setup!

I can tell you this: The trend has been challenged, the minor low has been established and now we are looking to work on “point #2”. A failure to recover the blue line will establish point #2. A violation of the horizontal red line will confirm point #3 and trigger the short play: TREND REVERSAL CONFIRMATION.

Traders must have patience as “we” look to capitalize on the 1-2-3 pattern. Using the chart samples below (real time 1-2-3 pattern confirmations), we can see that the typical setup takes anywhere from 4-6 months to confirm. Continue to follow me on Twitter as I will be highlighting the dozens of potential candidates over the next several weeks.

I can’t say that all or even if many will confirm but if the major indices confirm the pattern, it will be like taking candy from a baby on the short side. As you may know, nearly 75% of the stocks in the market follow or move in the same direction as the overall indices.

This could get fun. I am currently looking for a short term bounce in the general market and the stocks on my “short” watch list (point #2 confirmation). After point #2 forms, we then start to load up (on the action watch list) and look to short upon confirmation.

Recent posts reviewing the 1-2-3 Pattern:

• Trend Reversal Watch
• Trader Vic 1-2-3 Trend Reversal Pattern
• Google (GOOG) 1-2-3 Trend Reversal Confirmation

Two sample stocks confirming the 1-2-3 pattern and two starting to confirm the pattern: MSTR, PKX, ADBE and TECD

Notable stocks with the 1-2-3 pattern potentially forming:
MA, V, GOOG

Stocks with their 10-week moving average crossing below their 30-week moving average (this week):
NBL, JNJ, AGU, BBL, HPQ, SNN, UNF, MAN, ACN, HMC, MR, MEE, DWA, PEGA, ASML, CE, MSFT