Beginnings of a Major Bear Market Rally?

Is The Red Ink Turning Green?

Good evening folks, another one coming to you from Profit Edge Trading. Lately in the blog I’ve discussed and shown much of what other markets P.E.T has been trading such as Forex Currencies and Futures, but what about the overall picture of the stock market?

Well…thats a good question, and the question remains…can we or can we not stop the blood on the streets?? Usually when theres blood out, the sharks are already circling for the kill.

A quick glimpse of the Dow Jones Industrials as of the close on Friday on a 15 minute chart shows something interesting developing. Could this be the beginning of a Major Bear Market Rally in the works? As you already may know we have been extremely oversold for quite some time, and the counter-intuitive investor gut feeling is saying that there just might be a gold rush to the buy zone. If you also don’t know, there is a seasonal cycle in the market at this time during the year which simply is suggesting the market should be stronger. If you are not familiar with cycles and seasonal patterns, I highly suggest you educate yourself in those things because they can be a powerful additional tool in your trading. We like to look at these cycles for more confirmation in the market. A bigger question will be whether or not this market really does follow this cycle at this time. Most of any rally that has occurred during the last few weeks has been completely sucked into oblivion, just completely decimated by selling. It remains to be seen, but strong sentiment is already showing in the chart for some kind of an upswing. Check it out…

We see here the Dow rallying straight into resistance at the close on Friday indicating some unusual momentum at play. Also one of the indicators we follow, the CCI, is showing a pattern suggesting the same momentum strength. Can this strength continue for the next few weeks? All we can do is follow what the price action is telling us, more confirmation I’m sure will follow in the week ahead.