However, it is equally important to note that the bearish signals are over-riding. The annotations within the chart suggest the various technical breakdown of DOW and the same can be said other 2 indexes.
Hence, the weekend govt announcement to "bail out" of Freddie Mac and Fannie Mae, which can cost treasury about usd100bil each, it is hardly good news. the only good news, is perhaps that more people are being saved from being thrown out onto the streets if their houses are foreclosed. Yet, this cannot mean that the financial turmoil has gone away. At the macro level, it's a redistribution of wealth; the rich subsidising the poor (and the foolish), if this bail outs are to be financed by taxations.
For us traders, we need to know what to do Monday when the bell sounds.
If I had buliish positions set up last week and did not sell out on the Thurs' massacre and again on Fri's bounce, I'd be wise to sell into this morning's rally; a gift !
If by the ending minutes of Monday's trade, we see a strong +ve closing; meaning recovering at least most of what was lost last thurs, then possibly we are seeing the formation of a key reversal candle pattern. The Morning Star. If this happens, it's never too late to re-enter those bullish positions again. Remember, preservation of capital/maintaining an acceptable loss is by far the single most important discipline for long term success.
So this morning, it's a rare chance to redeem a screwed up prior bullish position, be grateful instead of being greedy. Get out first and then reassess later on the trading day.
After getting out on a possible strong rally thanks to fred and fannie, and subsequently holding no position can only guarantee one result; ie. no trade, means no losses possible. Isn't that a nice proposition, until a clearer signal is confirmed for up or down.
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