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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Steve Lee who started this subject2/21/2002 8:36:09 PM
From: ajtj99  Read Replies (5) of 99280
 
Caution to shorts - today's near bearish engulfing candle pierced the lower Bollinger Band and closed below it. Normally when we see that we get a higher close the following day. Jan. 22 and Feb. 7 are good examples to reference.

It can also indicate we may be near a minor trend change, as normally the price will hunt for the middle Bollinger Band after this happens. It may also just mean a 1-day respite from the downtrend, as happened Tuesday-Wedneday of this week, although Tuesday's candle stopped right at the lower BB.

Anyway, unless we are in a severe downtrend, this will normally give us at least a 1-day pause in our drop, if not a reversal to the middle BB.

I do believe we need to test real support before we get a reversal, so I'm looking for a drop to NDX 1333-1335 for the reversal to happen. That should be around COMP 1700.

Like Zeev says, how we handle this will determine how strong the bounce will be and if it is our intermediate bottom. With the VXN and VIX still relatively low as well as the equity put/call ratio still in middle range, I'm still leaning towards 1650 as the support that will cause a reversal going at least into March options expiration.

However, anyone short needs to exercize caution tomorrow and recognize that odds strongly favor a higher close, possibly as high as COMP 1755, IMO.
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