The Three-Day Chart's Unusual Four-Day Pattern: Something Set to Happen?

May 11, 2009

By Bill Singer

http://BrokeAndBroker.com

To those of you following this Three-Day-Down Chart, we developed an interesting trend with the close of trading today (Monday, May 11). On May 5,6,7,and 8 we put in a four-day pattern during which each trading day was a non-consecutive trend.  The last time that we had four-days of one-day trends was from trading days March 4 through March 9th -- and that heralded the beginning of this recent upswing and presaged four consecutive Up-days.  However, of likely more importance, the end of that period of indecision and lack of direction marked the end of one trend (bearish) and the start of another (bullish).  

My sense of this four-day event is that it demonstrates a lack of conviction by investors (something akin to a  narrowing of Bollinger Bands) and may best mark a time when the market has been treading water and may now be ready to pick a direction to swim towards.  Alas, since I am not using the chart to predict the market but merely to take its temperature, I am not going to venture a guess as to whether we're now ready to resume the recent upswing or enter into a more pronounced downturn.

What I will infer is that the four-days of one-day trends may well present a turning point for this recent two-month market.  I am as curious as you are as to what these numbers may portend.  Let's meet back here in a bit and see what's happened.

SEE UPDATED CHART AT

http://brokeandbroker.com/3daychart.htm

ARCHIVED BLOGS ON THE THREE-DAY TREND:

           http://www.brokeandbroker.com/index.php?a=blog&id=161  (April 6)

           http://www.brokeandbroker.com/index.php?a=blog&id=164  (April 8)

           http://www.brokeandbroker.com/index.php?a=blog&id=166  (April 14)

           http://www.brokeandbroker.com/index.php?a=blog&id=168  (April 14)

           http://www.brokeandbroker.com/index.php?a=blog&id=169  (April 16) 

           http://www.brokeandbroker.com/index.php?a=blog&id=175  (April 27)

           http://www.brokeandbroker.com/index.php?a=blog&id=176  (April 29)  

           Forbes.com: Three Down Days? Then Stay Away!  (May 8)  

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