Cautious on Upmove - Market Analysis for Oct 6th, 2011

With Schlumberger (SLB) up 16.5% since Tuesday morning, forgive me if I tighten my stops aggressively to preserve the bulk of the profit.

The recent wicked volatility in both directions requires traders in the position to continually take profits until the intermediate-term work confirms that a major low AND new bull trend are in progress.

While the Tues-Thurs rally certainly feels good, the dominant downtrend off the May-July top still remains the over-riding influence on the stock indices and on equity prices.

The near-vertical upmove in names like SLB could very well be a vicious short-covering, recovery rally. Unless and until SLB can hurdle the powerful down trendiness shown in the accompanying chart, I will treat the upmove cautiously -- even though my pattern work is becoming extremely constructive about the prospects for upside continuation into an intermediate-term advance.

  • Action-Oriented Trade Set-Ups in Stocks & ETFs
  • Macro Analysis of the Broader Markets
  • Detailed Technical Guidance for each Trading Idea
  • Live Interaction w/ Mike & Our Member Community
  • And Much, Much More!
Join Now! - Special Offer!
Veteran Wall Street analyst and financial author, Mike provides detailed and timely analysis and trade set-ups on a range of markets. Read more...

Have Mike's “Out Front” morning analysis delivered FREE to your email inbox twice weekly!