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Strategies & Market Trends : Classic TA Workplace
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To: Shack who wrote (148066)8/14/2007 4:19:47 PM
From: Perspective  Read Replies (3) of 209892
 
Can we talk about potential scenarios for tomorrow and reactions we might take?

It didn't knife through support, which makes it possible - I'd even say likely - that this is still part of the corrective structure off the 8/6 low. The Dow is probably the strongest argument for this. It's hard to see how the averages would trickle down through these levels; they either test them like six days ago and set up a short-covering rally, or we hammer through them.

If it opens positive, we set up for one more short-covering rally and build a triple bottom that is almost certain to fail (we still don't do triple bottoms, right?). This action would then presumably be a wave "b" low.

Another option is could gap down tomorrow but hold. You still establish a "b" low and set up a "c" wave back up.

My least likely scenario is that the wave C/3 down is about to launch. The Dow's minor new lows here don't support that idea, but if it gets broken violently tomorrow, we could set up a gap and run. I don't know how to react to that - sell into the weakness and go along for a presumed wave 3?

I'm curious how you're treating this decision - what criteria would *you* use to decide whether to buy a gap down, or sell into it? Perhaps it's not a high probability setup, so you just do nothing and wait until the market gives a higher probability setup?

BC
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