Sunday, October 01, 2006

Thursday/Friday Wrap It Up Day

A nice little vacation away from the madness of !!!!***DOW HITS RECORD***!!!! and although it did it really didn't and I can see by the volume on the DIA that the insanity is nearly ended. Going from 13 million shares on Wednesday to 6 million on Friday is a good indicator that most the the a-holes in the pits are bored with this little game.

Anyway it looks to me that the market is now poised to make another run since the up/down ratio has receded to 39%, the new 20 day highs are less than 400 and the new 20 day lows are increasing. The VIX continues its march in the deadband (+/- 5% of its 10 day moving average) and the three sisters all took a well deserved rest in the last hour on Friday and closed in the red. Given the interest on the day that is not surprising.

October is a strange month - it is the transition from Summer to Winter and most of the markets gains happen through late Fall into the Spring. In 2 of the last 6 years the market (based on its proxy SPY) has finished down in October so October mostly finishes on an up note. In the last two years the first three weeks went down and the market then recovered momentum in the last week. Three years ago we had a first week up, next two down and the fourth week up. So October is hard to predict except that generally speaking the market will finish the month up.

But one has to be careful in October - some of the worst single day crashes in the market have occurred during this month. Not lately but there have been some big ones in the past.

The magic coin is now 15 and 2 because I'm going to say Thursday was definitely a bearish day since two of the three major indicators (DIA, SPY and QQQQ) finished below Wednesday. Friday there was no call. But for Monday the little bugger says ... tails - bear in the air. As always, we'll see - I can hardly wait.

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