Donald; RE:" doji "
The XMI.X - Major Market Index, which incorporates a bit more of the NAZ and mid-caps than the SPX, shows a doji after long white candlestick. Sentiment is clearly uncertain, the bias is therefore to sell, and people probably still feel uncomfortable holding positions over the weekend because foreign markets are influencing us unpredictably.
The bullish view would be, that after breaking the 14d EMA / DownTrend Line, this is a normal pull-back and consolidation before making further gains; ie., a doji pause and retracement process.
The bearish view would be that, this is it, folks: the cat has bounced, and the market is gonna experience -150, -300 DOW days again.
Today was probably a good day to make a straddle - if one were to do anything in the face of uncertain sentiment - in response to the doji (or, 'spinning top' on the OEX) -- as lisa did on the SOX.X CALL + TXN PUT... though playing that sector alone is more risky than, say, the OEX or XMI Major Market: the SOX.X was not a doji today... it was a bearish engulfing pattern candlestick.
Most of us are now looking at a pivot, a point at which the market/sector index indicator we are watching would tilt sentiment definitively, one way or the other. As it happens, on the DJIA-30 index that is the focus of your index update, a pull-back to the old, short-term DownTrend Line, and my pivot line, meet tomorrow at ~8522.5, on a closing basis, on my daily chart.
I've always liked the way you express your model as a guitar string (^_^) After being plucked 1000 DOW points, my only expectation is vibrations (not growth) - so, we have reduced LEAPS, and are trying to accumulate investment-grade equities by nibbling on them when they appear to be short-term oversold, and likely to bounce.
-Steve |
