Last Friday, i warned about the low volume rally. If I interpret it correctly, last Friday's strong closing is a bear trap to lure in the last minute buyers so that it create a false sense of direction where the public thought the market would continue higher this week, when big sellers have already sold shorts around the congestion area i circled on my post "STI - A Squeeze of Shortist".
On Monday, big sellers had began taking profits for what they had bought at the bottom. They could have also started short selling, however i would wait for a more pronounced signal before taking a short position. Today STI's gaped down caused malaise which could be the break of the backbone of the late March - April rally. I would now look for how much buyers emerge to fill the gaped down area which would then allows me to determine if the rally should continue or if it had ended.
Ronald K
