Today we got a respite from the last three days of selling. As has been so often the case lately, the volume was less than the downside volume over the previous two sessions. So that's not very comforting for those who want the market to bounce. That could just be typical Monday action though although I suspect that people are also holding back a bit ahead of the State of the Union address and maybe even Friday's GDP number. One thing is for sure though, the market feels different than it has in several months. A lot of optimism for an economic recovery is already (and still) priced in to the market but there's still plenty that could go wrong. (Concern over Bernanke's reappointment shows that.) Perhaps that's just the same old wall of worry for the market to climb though.
From a technical standpoint, I want to lean against the 50-day moving averages of the indices. As long as the indices are below those averages I'm more apt to look for shorting opportunities. I'm not saying that I would be initiating shorts right now -- the market is too oversold for me to be comfortable doing that. But if we get a couple more days of relatively light volume rallies I'd look to short those.
no changes
| Trend | Nasdaq | S&P 500 | Russell 2000 |
|---|---|---|---|
| Long-Term | Up | Up | Up |
| Intermediate | Down | Down | Down |
| Short-term | Down | Down | Down |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
*** I'm simply using the indices' relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.
Hi Mike,
Every now and then I reread your "Tools of the 'Trade' -- How I Work" post. I was wondering how much has changed, and how much is still the same? In particular with your methodology.
Thanks for all your help
Yeah, I really need to update that post. My methodology is basically the same but some of the tools have changed. I was trading through Terra Nova for the last year+ but they just dropped support for the platform I was using. I just switched to MB Trading.
I switched from eSignal to QuoteTracker a few years back. Other than that things are pretty much the same.
1/27/10
Early Bird:
ESH10:
This pattern is our KEY intermediate pattern (60 to 120 days)
Due to the fact that clearly taking out 1050.50 confirms the correction and in addition it opens the door for a trend reversal.
RCT (from 10/20/09)
Time expectation: 86 days from 10/20/09, today is the 67th day.
Neutral
Equalizer: 1050.50
Up Price Target: 1180.25
Down Price Target: 920.75
Immediate to short term:
We’re heading immediately down to 1072.00
Before the decline we should reach 1092.75 to 1093.50
Not reaching 1093.25 to 1093.50 is immediately bearish.
I’m not expecting a profound bounce at 1072.00,
In fact the opposite
It should continue down to 1067.25
At 1067.25 we have a possibility for a profound bounce
The compression percentages say we have a 30% chance to profoundly bounce at 1067.25
Failure to profoundly bounce at 1067.25
means we’re continuing down to 1062.00
the percentages are 90% we profoundly bounce at 1062.00
but there is a catch.
clearly below 1061.00 the bottom falls out.
We have a very serious compression hole
The hole begins at 1061.00 and ends at 1038.00
Therefore on this potential decline 1061.00 to 1062.00 is bounce or break time.
Regarding the decline:
Below 1084.25 moves the door handle
Below 1082.00 opens the door
Below 1080.50 we’ve entered the decline room
This decline potentially is different than the previous decline from 1148.00
Potentially it doesn’t stop until MAYBE 1018.00
Below 1018.00 within 3 minutes we’re at 976.50
masterchetrading@gmail.com
great article! i keep rereading as i am watching the levels you indicated as critical. you have great insight and clear chart understanding and explanations. thank you for posting this piece.