Back in the Cloud (by Consistently Incredulous)

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It has been a little while since I had an ichimoku update… but then again, I’ve been sitting on the sidelines the entire time (which also happened to coincide with a huge work project – and since that pays the mortgage…).

In my last post on May 25th (here), I commented on my desire to see the price action retest the underside of the cloud and fail.  This happened in 07 & 08 and I have no reason to think it will not happen again- short of a black swan news event. 

As I was then, I continue looking for a July/Aug failed retest of a bearish cloud – similar to that of Sept 08.  Thanks to the ramp this morning, the underside of both the cloud and trend-zone are being tested by the NYSE composite.

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I’ve seen a lot of press in the last few days debating the validity of the 50/200 death cross signal.  In an earlier post today, Nathaniel’s thoughts mirrored my own – that the indicator needs confirmation.  I apply the same need of confirmation to the ichimoku.

Being short in April 08 would have been painful as the cloud was pierced from the underside, and remained above for another few months.   

Just for fun, I looked at the same 2003-2007 run up (“failed” death crosses in purple, the red one stuck).  At no point was both the cloud and primary trend-line violated.

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So I think we are getting close to a decision soon; maybe the next few weeks, if not days.  I will be sitting in cash until then – watching the trend-line and waiting for either the failure or successful retest of the cloud.

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