[Dan]

• Recently Nasdaq composite posted a bearish key day reversal at the high of the move. The last time it had posted a bearish key day reversal was on 10th Feb this year before it began a move lower of over 330 points in a month

• This development has been compounded by today’s close

• Following a bullish weekly reversal at the low the Nasdaq composite rallied for 9 consecutive weeks



However it is what it has done over the last 3 weeks that are of concern.

• 2 weeks ago it had a strong up week (Bullish)

• Last week it gapped higher at the open, had a fairly wide trading range and closed very near the open (Indecisive at the highs) Also remember it had a bearish key day reversal at the high of this week on 07 May.

• This week it gapped down into the open and had a decisive down week (Bearish)

This pattern of 3 candles is called an evening star formation and is the candlestick equivalent of an island reversal. This is a very bearish signal and suggests that at a minimum we are likely to see a significant correction to this 9-week rally. This at the same time as the S&P 500 rally was 63 days in duration (low to high) exactly the same as was seen when the green shoots were “being smoked” in the March-May period of 2008.