This is the new blog where I will talk about my experiences with the market and post links to articles, blogs and news regarding that market that I find interesting. There are a lot of good educational sites out there for people with the discipline and desire to learn how to trade. You don't have to be rich and you don't have to be a genius. You just have to have patience and the right attitude. Enough of that, there is an interesting market move taking place at the moment that I really want to talk about.

On April 23rd, all major markets exhibited a major bearish reversal cluster with all three markers on the Market Forecast Chart and the Market Sentiment all closing in overbought territory. This is typically a warning sign of an upcoming consolidation or pullback. Many people will tell you to wait for a confirmation sign before selling all your shares and jumping ship. Well, if you're one of those people, I think you may very well have gotten that sign today. On April 26th, the Dow trading nearly sideways, closing at 11,205 signaling a potential consolidation period. The following date a short, yet marked, pull back was observed as the Dow fell 212 points. This would be the first hint of a confirmation of the bearish cluster on the 23rd. Further confirmation has now been presented between yesterday and today's closes. Following the pullback on the 26th, the Dow rallied for 2 days closing at 11,167 which was a lower high. This is a sign of weakness in a bullish trend. (By definition it is actually the beginning of a downtrend.) Today there was an immediate sell off resulting in a Dow drop of 158 points. Looking at the chart, the candlestick pattern formed is remarkably close to a bearish engulfing.

Furthermore we could look at the Elliott Wave pattern produced over the past 20 months (give or take). Starting somewhere around August of 2008, the Dow descended in a rough wave pattern until bottoming out in March of 2009. This was a visual marker of our major recession out of which we are currently attempting to climb. The first two peaks of the ascending wave coming out of March '09 manifested around June 2009 and January of this year. This means we could likely be looking at a somewhat extended consolidation period on the horizon potentially lasting several months.

(To see the Elliott Wave pattern discussed above, I suggest looking at a 2-year period with week intervals.)

Given the above information, I am looking into short positions for the short-term. It's very difficult to predict (especially in this extremely volatile market) how long a consolidation period may last. Given what I have observed over the past months, I doubt the longevity of any coming bear trend. For this reason I'm playing a few short positions but nothing that I expect to hold longer than 3 - 6 weeks. If we see further confirmation of a strengthening bear trend down the road, I can adjust my positions accordingly.