Securities Research Services

Thursday, May 22, 2008

The True Trend Takes Hold

The Market finally revealed its hand yesterday and what it was holding is exactly what we have been projecting.

Trade opportunities have been slim recently, unless you were willing to take on extreme amounts of risk. We had recommended shorting the SPY in the current area reasoning that the price was likely to fail just above its 200-day average.

Indeed, the SPY tagged the upper band of its rising wedge pattern on Monday, gapped down to form a shooting star top on Tuesday, and yesterday sold off on the heaviest volume in 7 weeks, breaking down below the bearish rising wedge.

Fear spiked yesterday, so we may see a bounce over the next day or two. Any bounces are now selling opportunities.

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