Saturday, November 18, 2006

Friday - Itsa Wrap

Lately nothing has been able to keep the Dow Industrials down. It poked its head above the close line around 12:30 as we predicted would happen. NASDAQ was down but not by much and the Q's actually closed on yesterday's number. The Q's are still returning more (on average) than IWM by the way and I will let you know when that changes.

This morning right out of the box I took a quick shot at a newbie called ID. This was written in my notebook and I didn't know why so I took a look at about 10 to 10 and it was up strong. Given the market was sort of floundering around at the time I took a position and 15 minutes later sold it for a 30 cent profit. If everyday was like that I'd be in heaven. Unfortunately after a short break helping out the wife on a project I returned and about the time the market started turning I saw an old friend - ATHR. Now ATHR as we pointed out in an earlier post was not a particularly good set-up and I am still holding ATHR because I think the market is going to go up on Monday and take ATHR with it. So it is no longer a trade but now it has risen to swing-trade status or, an investment - too bad it doesn't pay a dividend.

The market is going up on Monday you say - how do you know - well despite the obvious (rule 1 - nobody knows nothing including me) the up/down ratio is printing 42%, there are 575 new 20 day highs which is 400+ less than yesterday and even though the new lows are weak at 214 there is a new reason for that.

When the new lows stay low when the new highs pull back it means that the market is in a consolidation mode. What you want to avoid are really low new highs coupled with really high new lows as that means the market is on its way down. I think. As with everything else you read on this site keep in mind you don't know nothing either even after you've read this stuff.

The VIX is proving to be, as usual, less useful on the bottom as it is on the top and I need to take a closer look at that. I think we can use the VIX as a measure of trader sentiment and right now that is mellow - only because I hate the word "complacent" - fact is we passed complacency weeks ago and are in some world of trading nirvana where absolutely nothing is wrong and will stay that way for a long long time. Whatever dude.

What else - oh yes the three sisters (and for those new these parts they are DIA, SPY, and the ever lovely QQQQ) all finished the last hour strong white, as did the ugly step sister (IWM) and Goldie (GS) (the proxy for the market of the 22nd century) finished with a white doji - that means "I'm sorry I went down today - please buy me and I'll print a 2 handle on Monday."

So barring some freaking catastrophe that's my take.

The magic coin returns to its winning ways and now stands at 31 and 18 and for Monday .... tails - bear - who wants to listen to a stupid magic coin anyway? Only has a 63% chance of being right. (Based on past performance and as you all know in a binary situation the actual probability of any outcome is 50% regardless of the dumbass premise behind it - or you better know that at least).

I'll be back later this weekend with some other neat stuff I've been thinking about.

No comments: