Cautious on Upmove

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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.