LEH: Don't Ignore The Technicals

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From this morning...

"...this 68% rally in just two days is exactly the type of sharp reversal that is a hallmark of a good Wolfe Wave. When you get this kind of awesome rally, take profits, or at least some profits."

You're never going to go wrong taking a profit, especially a big one like this, and especially when the rally has reached an area of resistance.

We can see from the Hourly Chart that LEH rallied directly to trendlines off the Symmetrical Triangle that broke down on July 9. The 68% rally, to 20.15 this morning, turned out to be the exact short-term high.

"Former support 'should be' resistance on a rally." It was. ALL of the price area of that broken Symmetrical Triangle represents resistance on a rally, known as "congestion," so that's a good place to take profits.

From there, LEH sold off $3.30 to fill the 16.85 gap from yesterday. The low was 16.81. That's a nice re-retry long. We're playing with House Money at that point. Just make sure to limit losses and not give back too much of the gain on any further selloff.

In this case, though, from the 16.81 gap-filling low, LEH has rallied another 11%, to 18.66, so far. It's at BID 18.50...ASK 18.51.