On the Brink of… Market Neutral. Since late February, as the Broadening Wedge was forming, we’ve been discussing the probability of 1st, a break; and second, a retest. In yesterday’s piece I clamored about how great the risk/reward was for entering short positions. Toward the close, the newly formed resistance line looked as if it could be penetrated. Needless to say, it wasn’t.
But, what if? If the NDX, and all other sisters, reenter the prior base area (which looks as if will happen as we watch pre-market futures), the market doesn’t go straight back to Bullish. It will fester around to see if the combined short-covering and bull zeal could push the market topside once again. This should allow the formation of a bullish technical pattern to arise. If it does, time to switch side; as for now, still holding the line, but just barely.