Posted by: stockscooter | May 22, 2012

Momma Ain’t Happy

There’s an old saying, “If Momma ain’t happy, nobody’s happy.”  Currently, I believe the “Momma” in this market is high risk bonds.  There is great concern for an upcoming bearish breakdown in this market.  If you go back a few posts, you will read about the head and shoulder pattern forming  in the high yield market, which is bearish.  I would like to review the current candlesticks.

The first red candle notated by a red arrow is a “hangman”.  This is a bearish sign of reversal at corresponding tops.  The second arrow is a spinning top which shows indecision.  The green candle sandwiched in between is a small bodied candle which is indicative of indecision.  The tops of all three main bodies at 13.06 relates to the August, 2011 open, as shown by the blue line extension.  Why is this important?  Because the volume that month was significant, shown with a blue circle.  You will also note the past three month volume totals are on a decline, as price bumps it’s head against this resistance level.  This is more indication of bearishness developing. What would turn me bullish?  Simple, a high volume breakout above 13.06 and a close above 13.40 (the left shoulder body highs).

Because there is a huge expanse beneath the current market for ultimate support, in the three dollar range,  risk on the downside far outweighs upside potential for gain.  It looks like Momma’s gonna be a bear for awhile.

As always, do your own due diligence.

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