I was saying yesterday morning that a pinocchio through trendline support was generally soon followed by a more definite break, and we then saw that hourly close below rising support from the December 19th low that I was looking for:
Well, we're down to the last month of this mentally-challenged year of 2011, and November has closed with a bang. The nearly 500 point explosion on the Dow obfuscates the fact that, for the month, the Dow was up a whopping three-quarters of a single percent, and the Russell was down a ginormous half of one percent. In other words, once again, huge amounts of smoke, and absolutely no fire.
One reader asked me to show the ERY chart again, which has had an uncanny knack for spotting turns. I imagine if the market were left to its own devices, ERY would have traversed all the way back up to the upper trendline, but the massive central bank intervention short-circuited (again) this path, and we're approaching that lower line once again.
The most fascinating chart to me right now is that of the S&P e-mini, shown below. We have powered back three Fibonacci levels in just a few days, and we are mashed right up against the apex of that triangle. At these levels, a pause (or modest reversal) makes the most sense.
An element in the market's direction, of course, is the Euro (although not as much recently - - witness today's modest rise in the Euro compared to the fireworks show in equities). I look at this graph and continue to believe the two giant tops we saw in 2007/2008 and 2010 closely match a third top, formed this year. Breaking the most recent support trendline would at last pave the way for serious weakness in equities, but at this point, that's a pretty big "if".
What continues to be so frustrating about this market is that, in the end, it really isn't going anywhere. Take a look at the relatively volatile MidCap index over the past twelve months. It is pretty much unchanged, after twelve of the most volatile and news-packed months in market history. It's been up about 15% and down about 15%, but in the end............nada.
We close with NQ, which continues to obey its diamond pattern very well. We remain beneath this pattern, and as with the ES, the breathtaking move over the past four trading sessions is due for a rest.
Not so great!
That shouldn't come as a huge surprise, since I was short. The good news is that the very thing that I've been griping about so much - - - my refusal to overly-expose myself in this market - - - is what is saving me today. I came into the day 70% in cash (the rest in small shorts), thus I am down 1.38% as of this writing, in the face of a Dow that has been up almost 500 points.
So, as bad days goes, this one is quite survivable.
Over the last few months we have been talking about the .35% symmetry support. As the market was falling in August it seemed impossible for the support to hold but it did and from the support we have rallied 1500 DOW points.
It seems like we would have to pullback from where we are now but if we look at the 30 Minute chart you can see the .35% has held again at the 11,600 level. As long as we stay above the 11,600 this market does have a shot at making a new high above the 12,900 high. As of right now the bigger trend and 30 minute trend is stll up.
It seems like we should pullback but if we can follow through today to the upside we could get a short squeeze from the overbought daily levels as the weekly and monthly chart kicks in. The next two days are going to be very important. Right now the daily NQ candle looks like a DOJI but we still have a few more hours left in todays session.
This is our last bigger picture update from yesterday http://wwweminischool.wordpress.com/2011/11/08/what-if/
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This post may offend many and that is not its intention. This is a think piece I have been formulating in my mind for quite some time now. Its purpose is to get you to think about your trading methodology(s) and setups in a critical light.
To my way of thinking, traders who utilize technical analysis all fall into three broad groups (traders who use purely fundamental analysis are excluded from this type of grouping).
The Prognosticator
In this group I include Elliot Wave traders, Gann traders and astrological traders. These traders trade in the future. Based on what they say may happen and some go as far as to say what WILL happen. When a trade is a failure, they use misinterpretation of past price action as the excuse for the failed trade. It seems that Elliot wave traders (mostly sellers of the system) are in a constant civil war as to "correct" interpretation. Gann followers can spend their entire trading life searching for his "missing" piece. A lot of legend has been created around WD Gann, promulgated by promoters of his methodology. WD Gann was prolific in his writings and covered a multitude of areas. Regardless of what happens next, some part of his work can be given credit for "calling" the "move." Too bad we lack foresight to know which one! He is also been credited to have died with a tidy fortune due to his trading. Interviews with his son (who happened to have been in the banking business) revealed that he died in modest means and made the bulk of his money promoting his ideas over his life time. The foremost (and longest being tracked) in the astrological trading group is Arch Crawford. In over 25 years of his trading service, he has had flashes of brilliance. However, according to Hulbert, his record, overall, has well under performed the market during the long period tracked. Prognosticators rely on interpretation of price. So much for the prognosticators.
Continue reading "Which Type Trader Are You? (by Market Sniper)" »
I am finding the Dow 30 is playing nicely off the Fibonacci retracement levels I've drawn below. It's suggesting to me to sit tight and wait for us to claw back up to 11,900 or so before getting meaty, beaty, big and bouncy again.
