TradeWinds for May 8th

Last week unfolded pretty much the way we thought it would and the way we wanted to see.

We said for some time that our Moderate Momentum indicator was stubbornly overbought and needed to unwind a bit. That has been accomplished as our Fast Momentum indicator has moved to an over sold level while bringing the moderate down, and most importantly, leaving our slow or long term indicator firmly in the positive TradeWinds zone. This sets us up for a bounce sometime in the next few days.

Of course, a bounce to the long side is not a sure thing. Remember every trend ends with a break down of the pattern of the trend. So we are at the point where the long continues by a bounce or breaks down. Be sure the bounce is in place before placing the big bets. And keep an eye out for Mr. Head Fake. He can get you by a fake to the long side and then a breakdown, or a fake to down side followed by a strong rally. You never know, which is what makes this game so fun and maddening. I think the odds are in the favor of a long side move based upon the strength of slow momentum indicator, broadbased movement of sectors and growing oversold condition of the market.

Last week was interesting for our TradeWinds Black Box. Check out the results along with our Top 25 lists.