The case for a bottom

Posted by downtowntrader | 6/19/2006 08:44:00 PM | 0 comments »

Here are two charts showing the recent downtrend slowing to the point were a more substantial rally attempt can occur. Picking bottoms or lows is very difficult, but with prudent stop losses the chance for good risk reward trades is good.

Here is the SPY 60 minute chart over the past 20 days. The ADX line is almost flat and there were some good diverences on RSI and MACD on the downtrend. SPY is oversold again and could get a bounce as soon as tomorrow afternoon. Here is the Nasdaq Composite chart showing similar action to SPY.
There were some nice shorts today including some of the ones I highlighted last night, but I am keeping my stops tight on both longs and shorts until we either make a higher low or take out the recent lows. I am also keeping a close eye on gold to see if it did capitulate last week.

Good Luck,