INDEX UPDATE
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Since I am still new at TA and almost expirimenting/researching on a daily basis, the reaction of the market yesterday really puzzled me as Im sure it did with most. So instead of eating myself out of depression or spending all night thinking about LISA, I spent alot of time micro-analyzing the charts and technicals.
And I did come up with a discovery. This is not based on only one technical indicator, but many and each supported the same conclusion, and that we are all crazy for playing PUTs right now. ONLY KIDDING.
Seriously, I discovered the following which was supported by different indicators. I tried to be as objective as possible and not allow my feelings effect my analysis, since anyone can come up with an analytical/mathematical explaination for why the market did something.
What was unique was that it was very clear and not subjective, in fact I missed it several times looking for something else that was much more complicated.
Unfortunately, I only have the data going back to OCT, so that is the downside, but for the future it looks very promising.
Friday's performance fit the same technical pattern of the following days for the DOW:
JAN 5
DEC 22
DEC 16
OCT 21
Each time this pattern happened since OCT, the extent of my data, it worked. After each of the above days the next day was down and in 3 of the 4 above mentioned dates it was the beginning of a big pullback.
This signal is not to pick all peaks since there were other peaks during this period, but it was a specific technical pattern which is not noticable by simple chart reading or common technical indicators.
The KEY is not that it was the beginning of a big pullback, but the movement in the DOW for the next 1-2 days. Each time it was at least 150 point drop for the 2 day period, with one of the 2 days being a substantial down day of approximately 100 points, at least intraday.
In 3 of the 4 instances, it lead to a bigger drop, but the main issue, especially for us short term/day traders, is if we can identify some of those big 100 point down days consistently. The DEC 22 was not the beginning of a drop, but during and still produced the same results.
I have also notice that such same pattern may be working to identify also the reverse which is identifying the approximate 100 point up days within a 1-2 day time frame. This signal will not identify all approximate 100 point days but only those, which fits a specific technical pattern, and so far its about once a month.
Again, it is only an on-going study since I can only back test it till OCT.
So according to this signal, MON-TUE should bring us about a 150 point drop in the DOW. Yes, I am aware that CPQ announced bad numbers after hours, but such was not taken into consideration when I was doing this study.
Lets see if it works, or my time could have been better spent on eating or thinking of you know who. gggggggggggggggg
Seeya |
