Chart of the day, ADM.

Keeping an eye for a H&S bottom with the neckline at $36.47. H&S target if neckline breaks is $42.00.

At the same time ADM is challenging the neckline of a H&S bottom, Corn is challenging the neckline for a H&S top. As corn goes down, profit margins for ethanol producers are heading higher so this is a very critical point in time for the ethanol long play. ADM is the safest bet but I also like ANDE. PEIX and VSE are secondary more speculative plays with much weaker relative strength charts.

HOW CUTE!!!

What an awesome set up?

This is a beautifull set up. Hopefully I have time to buy this on Monday before they run it. What is there not to like. It broke the resistance at 36 and it has a tight 3 day consolidation on contracting volume. It should start shooting for the high of $38.55 soon, maybe higher.

Market seems to consolidate for the next move, the retest of the highs

I think the market will retest the top and even break it marginally. When you have a 38-50 percent fib retracement of the prior move that is a weak retracement and the move comes right back down and tests or breaks the lows. When you have a 62% fib retracement that is a strong retracement and it usually goes on to retrace the whole 100% of the prior move. That is what we will see now. 100% retracement and a test of the highs. I suspect the retest will first start with a sharp drop 100-130 points, and then a fast same day recovery and a close in to positive territory which will set up the retest of the prior highs.I look inside the market and I don't see anything that can lead it lower. The leaders of the last drop, the home builders and the financials are too oversold to go lower, they still need to work their oversold conditions. The Chinese Exchange, one of the reasons the market sold off on 2/27/07 is hitting new highs again.There is noone left to lead the market lower. However there are plenty of sectors to move this market higher. Tranports, basic materials, energy, large cap techs like csco msft orcl emc ibm are a few stock that come to my mind that can take this market higher.
10:18 PM

Google seems ready to move and an S&P 500 flashback.

Above is the chart of the S&P 500 during 1991-1993 period. What I am noticing is that the market back then had a very slow trajectory rising about 8% per year. It is interesting to know that we did had similar problems back then as we are having now. Economy was growing slow,

the real estate market was declining; the banks were plagued from bad loan problems with Citigroup being on the verge of bankruptcy; many S&Ls went under; auto sales were problematic with Chrysler running into financial distress; jobless rate was persistently high with media talking about jobless recovery all the time. Despite all those problems the market did not manage to get in a bear market but it continued to rise even though the rise was at a very slow pace. I mention this to warn all the bears predicting Armageddon and loading up on puts every time the market sells off that the stock market does not have to crash or get into a bear phase just because there is a housing bust and subrime lenders are going bankrupt. We had been there before and the market could not even do a 10% correction (sounds familiar?). We all need to put things into perspective and keep an open mind about this. Yes the economy is coming off from probably the worst housing bust in decades but that does not necessarily mean we will see a bear market. Don't get me wrong I don't rule a bear market out but it does not have to happen.

Google broke a 3 month rising wedge on rising volume. A follow through tomorrow on higher volume should validate the move. I am willing to take the trade on an early retracement tomorrow. Target on the wedge is the high of last January.