I was of the opinion that there would be a bounce, and boy has there ever been. I had thought it would be a selling opportunity, but it does not appear to be now. This has been a moonshot, and gapped higher tonight as I post this. From a weekly perspective we are still in a downtrend, but from a daily perspective we no longer are. I have labeled a 5 point Megaphone pattern. This was originally written about by Edwards and Magee and has more recently been plagiarized by a few people claiming it as their own. Of course they are misrepresenting the truth, something very common in today's world.
Often you will see these at key turning points. I was aware of this when we were at the lows, but I just did not have any other buy signals, and these signals are notoriously inaccurate. They are not near good enough just to trade on their own. It is really more for observation than anything else. One so called owner of this concept, by himself of course, claims these are 70% accurate. They are nowhere near that, but they are a tool that if you personally can figure out how to know when they will work and will not, you have something valuable to trade with. I have never been able to figure out how to consistently trade them, so I don't trade them at all.
It does appear to me that if we move up another 20 points or so in this, we should meet some good resistance and a possible weekly sell spot might be something to look for.
I got stopped out in my short trade in Heating Oil today. When we get these explosive stock moves, virtually everything on the board except the dollar goes straight with it. As much as it pains me to say this, until proven otherwise you probably should filter all trades no matter what market except for the softs and meats, with what you think stocks will do. Shorting anything during stock rallies for the last year has been impossible to do profitably. I have never seen anything like this but it is what it is. I did short the DX today which of course will often trade opposite of stocks on a day like this. This also did not used to be the case. Again, it is what it is, deal with it.
As much as it may be tempting to short this moonshot if you are bearish, this has squeeze written all over it and I would not recommend it until we see it show signs of stalling. Remember, trade what is not what you think should be.