Mish,
Most of the post you are asking my thoughts about are fundamental arguments to predict market direction. I do not in any way diminish the value of FA, but FWIW, my musings of compx direction are based strictly on the charts and the various indicators which seem to work best for me. There are other things I follow, such as Rydex ratios (from MITA thread) which have been bullish for the market for the last couple of days. Then there are areas of analysis which I am just starting to delve into (Wave theory - unfortunately thanks to an immature individual, a sore subject now) but really don't use much. I try also to be aware of certain cycles, my favorite which is lunar cycles.
Mainly, I try to use the KISS (keep it simple, stupid) method. In other words, if there is a simple break in the trend (ST), I do not try to second guess the market; price on the chart has already told me that the pendulum has swung. Sure, I am aware of the poor fundamentals...but I will not allow that to make me be on the wrong side of a move when it is extremely obvious to me a move is happening. If the rydex ratios are bearish, and price is trending down, yes, I will focus on the bearish fundamentals but when the trend changes, the fundamentals get stored in the back of my mind for future use....
I suspect you are asking my opinion based on uncanny accuracy
of my market direction calls on MDD. I do have a knack for
for it, it is not luck, but it is nothing mysterious or magical either. It is 99% TA, with the additional kicker being a leap of faith, if you will, on trusting what the chart is saying, even when fundamentally there is cause to not trust what the chart illustrates.
As I pointed out yesterday, there was a likely "doji" or even more positive candlestick being formed on yesterday's close.
I know this to be a reliable reversal signal, and was therefore bullish from the close of yesterdays trading.
I expected up action for today, little did I know it would be so dramatic and ensue in yesterday's after hours. In either case, todays action breaks the ST downtrend from 7/2-11.
There is nothing to think about for me. The first and only question to me is how far will it go? While I am careful not to allow my hypothesized anticipations of a move blind my ability to see the turnaround back down when it comes, there is no way I would trade the opposite direction of ST direction. If I had any shorts open yesterday, I would have closed them right before the market close as it was quite obvious the implication from yesterday's close would be bullish. Why suffer on the wrong side of the fence and have to sweat out the action against your position? How can anyone really know how extreme the action will move against you? Stubbornly clinging to a view which contradicts price action is dangerous, I won't do it. As I have read before "Lose your opinion, not your money". A real gem, if you will. Uh, strike that....a real beautiful truism to keep mindful of....
From here, my focus is on the stochastics of the daily crossing up, ADX confirming, the daily candles, anticipation of higher highs and higher lows. The trend is your friend, until it ends. My first anticipation of a realistic target is the top of the recent downtrend line. From here, I remain bullish until chart indicators turn back down, and I would pay particular attention to behavior as price approaches potential targets such as the downtrend line I mentioned. Considering the possibility of the "wave 3" which may or may not be correct, I would be mindful of a break of the trendline, should price manage to achieve that level over the days to come.
Cerainly, one has to be aware of today's opening gap and that the market will attempt to fill that gap. I would take advantage of this propensity to enter positions on the long side as the daily chart signal is loud and clear. Those that jumped on the move late will have their fortitude tested, but ultimately, I expect that the buy signal based on yesterday's candle and today's follow through to prevail. So, intraday, shorts will have another chance to exit their positions, longs will have have better entries presented. Impatient shorts initiated during yesterday's AH run up will have to suffer during the time the gap up attempts to fill, impatient longs initiated after the gap up will have to suffer as price attempt to fill the gap. The market tends to behave in such a way as to deviously make everyone think they were wrong.
At the end of the day, I would expect and predict that the longs will be right.
I know this does not directly answer your comments, but based on my work and focus, it is the best I can do.
Best of luck to you and all,
Regards,
Eichler |
