#2 JULY 5, 2011 FALSE SIGNAL FLAG BREAKOUT

 

The market had a sharp downside breakout of a flag pattern (low day at beginning of July). The very next day the market more than recovered the entire loss rallying back to the top of the flag pattern. The false breakout of the flag, as confirmed by this rebound day, provided a bullish signal, as the market continued higher for the remainder of the week.  The illustrated failed signal proved to be a major turning point. The market subsequently skyrocketed, gaining nearly $400 in two months..