By: Scott Redler
Yesterday I mentioned that we could be putting in a “rounding top”, or some type of wedge formation. This is typically a pattern of indecision at key inflection points. The market is figuring out right now if the slew of positive earnings reports we have seen warrant another leg higher, or whether the uptrend will break for another 5-9% correction.
We’ve all reduced our risk exposure to the long side since the Goldman news broke, and have been just scalping very stock and sector specific trades. But now we might get a major change on complexion!
The banks are getting weaker, and with a Obama rolling in town today they could see additional selling. If they break recent lower ranges it will be hard for most other sectors to hold on.
The indices are hanging by a thread, and it seems its only a matter of time before weakness in the financials weighs them down and the thread breaks.
