"The time of maximum pessimism is the best time to buy and the time of maximum optimism is the best time to sell."
- John Templeton
The opening days this trading week so far produced a decline for stocks, currencies and commodities as some dollar strength emerged.
The Dow Jones produced a decline yesterday in which the market pondered snapping 10900. This of course didn't materialise and from that a rally has so far emerged taking us right back to the problematic high.
Four Hour Dow Jones Chart
The Chart above shows the entire run up for the Dow Jones in Four Hour format. We are virtually coming up to a month in which the Dow Jones has been in around a 250 point tight range. This of course like all other times means a significant move is around the corner! The range is shown by the orange sideways framework.
The Imperative Question
The real question is will the market reject 10150 once again for will the index produce a 'breakout-fake out'?
TMS would expect prices pullback in significant fashion but we have to be aware of the 'breakout-fake out' scenario which is denoted by the yellow trend lines. This map would mean prices could either fail in today's session from 10150 into the close coupled with after hour action OR the market could simply grind higher in which prices would move very near to 10300. This possible new high scenario was mentioned in our previous update and the above chart shows this in line with current trading action so far.
As complacency and optimism is kicking in at these lofty levels the contrarian in us has us on guard for the possibility of a dangerous October finish/November start.
For the first time ever TMS has made a 6 month subscription package available to our global audience in which an exclusive rate has been issued for a limited time only. All our annual subscription packages were snapped up immediately and unfortunately will not be offered again until some point in 2011. Having been bombarded with requests to bring back a package rate we have decided to tailor a 6 month package for new clients whilst also giving a chance for our current monthly subscribers to join us at a rate in which the availability will soon finish - TMS will only allow for the availability of 100 places.
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