I like The Number 3

I always have.  Even as a child I recall my third year being my finest, it was such an enlightening age where the fog of sounds all started to become words and the words flowed off my tongue like a Shakespearian thespian.  I could ride a bike without the trainers for the first time.  Everything clicked.

That year has stuck with me and shapes many of my trading methods.  As much as it may seem ‘top down’ to rely on something divisible by three, I have gone the opposite direction, working raw stats to extract probabilities, and quite often I return to the number three.

The 33 ema, for example, mimics VWAP surprisingly well.  And a daily 99 ema, oh the jump you have on all the traders working the 100 sma is staggering.  I leave them in the dust 9 out of ten times.

When a major news piece hits the market, like today’s 2pm Fed, I sit with laser focus and carefully indentify each reaction I see.  The first reaction is usually simply, the second can be a bit slippery, and the third is where the babies are made.

The third reaction today took a strong bit of deliberation but ultimately was higher.  It was by no means gregarious and certainly nothing to hang ones hat upon.  However, here I was, sitting here, and I might as well make myself useful and share this information with any reader who had more pressing matters to attend to from 2-4pm.  Corporate Raul would saw his leg off to have a source like me.  I write for corporate Raul and street Raul eating MacDonald soda pops from the trash can.

On the Net, the Nasdaq printed an inside day verse yesterday.  It shows a slowing of the auction higher.  We found some responsive selling, but the prior day lows held.  Tomorrow, as many of you know, is Thursday and the day after is Halloween and then a spooky weekend and then BOOM, a new month, new money to put to work.

So ask yourself, are we set for another month of outflows, or will the mutual funds put on their pony costumes and serve up a proper mutual fund Monday, new ATH and all?

As always, TBD.

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