Just as quickly as the market popped on that (alleged?) Yukos news out of Russia yesterday it dropped today on a reversal of that decision. It’s like Russia has the market(s) held hostage. Today’s thrashing has the S&P and Dow back at their 2004 lows and the NASDAQ is right at the bottom of its trend channel. It never ceases to amaze me how the market ends up at these make-or-break points on the charts just when some important report or event is due. This time we have the jobs report tomorrow and another Fed interest rate decision. As usual before the Fed I’ll be in cash. I may try a day trade or two in the interim but I won’t be holding anything overnight until after the Fed decision.
Here are charts of the NASDAQ and the VIX which is rallying again:
Update: Believe it or not, I didn’t plagiarize Tom’s post… we’ve just been smoking the same herb! 
As I see it, drawing trendlines is always an act of “revisionist history”. Take the chart of the Nasdaq, for example: a trendline connecting the January, April, and early June peaks would have implied a breakout in late June… which swiftly reversed itself and morphed into the precipitous decline we find ourselves mired in right now. Pity the poor trader who bought based on that false buy signal! But we can evade such uncomfortable truths – as most technical analysts are wont to do – by re-drawing the line so that the false breakout is swept under the rug. Doing so perpetuates the impression that trendlines are more useful than they actually are.
Don’t get me wrong – this is just a comment on TA in general, and not on your methods in particular. I happen to be something of a technical analyst myself, but I often try to capitalize on TA’s shortcomings by trading false signals in the context of a fundamental thesis. For example, take a gander at JWN (daily), which put in a false breakout that quickly morphed into a double top. Something like that would be my bread and butter.