Well I am not trading anymore as I am on a losing streak so I need a break. Tried to catch the bounce yesterday without real time data and got creamed as I was shook out by buying about 10 minutes too early on what would have been a double. I got to get some time off again <ggg>
Anyway, we are at a critical juncture here and I think the discussion here so far as I caught up on the thread can be actually read where both sides are correct...possibly.
As I wrote last night, my system gave a short term buy signal for the low of yesterday on the OEX, SPX and DOW. The market dropped hard then rebounded hard and the futures are up right now hinting at an up day. I wasn't too confident in my system's signal but decided it probably was good and tried it. This signal is only good for one to two day trades on average although it can lead to more on occassion.
I looked at the daily charts and I see the bullish arguments as we did bounce off some important levels and even when I went to my weekly charts ( Sorry, didn't have time to update them last night on my site), they too show we hit the middle tines and bounced. HOWEVER, the Weekly charts also show a topping action in almost everything I look at. Individual stocks, many indexes and most of the indicators. If we don't head up next week with some conviction aka volume, the weekly charts say we are heading down past the middle tines and that would put us squarly into a bearish fork pattern. I had violations of the bullish forks on many stocks and sector indexes this week. This is what clued me in last year that the trend had changed early on and it also was an early indicator this spring. The same pattern of violations is starting again. There were not that many yet but if it continues, it looks real bad for the longer term.
I do show a short term bounce likely but if it is not strong, which I doubt it will be, and on good volume, the odds of a strong drop in the coming weeks looms very very large.
I actually have such mixed signals for the short term, that I am not even going to try to get positioned. I have short term buy signals comig out my ears but I also show mid term and longer term danger signals by the boat load.
Bulls could point to yesterday's action and call it a hammer bottom candle formation off supports. One look at a weekly chart of most of the market leader stocks though this week is littered with topping patterns. Gravestone dojis, hanging man formations, tweezer tops from last week's gains and this week's drop, bearish engulfing candles etc. Looking at the indicators, this week was only the beginning preview of what is to come IMO.
Short term traders with a high risk level may try to play the bounce and win, mid term traders ( 2 weeks) will have a tough time, long term traders (6 months) IMO should be bailing and selling every rally because I think we are about to have a sale on stocks that will allow for much cheaper prices to re-enter later.
Like I said, I am confused myself and not trading but I give better advice than I am able to trade myself <ng>. I see what is coming, I just can't figure out how to capitalize on it. Personally I am hoping for a huge rally today so I can get some long term puts for this month but I doubt that will happen.
Sorry, I did not manage to recompute Max Pain last night and this morning, the site I use for the contracts dropped September and is only showing October strikes now so I can't do it this morning.
PS - I apparently got the attention of the NYSE as I am on a 90 day watch. Anyone else ever had this happen? It apparently was why I was getting lousy fills the last couple weeks. I pushed hard as to why there was such a huge delay in my executions and it turns out all my orders were getting reviewed before they would execute them thus my delayed executions and lousy fills. Had I known this in advance, I wouldn't have even attempted to day trade. These delays cost me a bundle. Anything I can do about it??????????????????
Good Luck,
Lee |
