I had a helluva day at work, not getting home until after 9:00 p.m., and then I went over to the recording studio to begin mixing a project we started this past weekend.
I do not want to be a lazy goat fucker, so I’ll work in a quick post, sans charts.
I will likely get rid of my downside hedges tomorrow.
The indexes were pushed off their lows today, closing above the 50 day moving average. They are oversold, and the RSI(2) is at levels associated with reversals. The short-term trendline, started in March, is still intact.
Volume grew today, which means there was distribution.
I expect tomorrow to see support near the 50 day, with the indexes closing flat to up. I want to stay long here as long as we are making higher highs and higher lows, staying above the 50 day average.
I will put your theories to the test.
Developing…
50 DMA leaves another 1.5% drop. RSI 2 is for suckers.
Sia, if you have nothing postive to contribute, then fuck off. You are 2 for 2 with your negative bullshit.
I’m seeing a confirmation of the Bull Flag on my technical indicators for INDU that hit on April 2
But, it’s not a major signal so I’m keeping a close eye on it.
Today may close flat to up or be an inside day, before getting pummeled anew. I doubt highly we’ve seen the low for the week. I’m thinking if today hangs in there, Friday will be fug with carryover to Monday am. Then, I’d be interested in getting long again but not here, not yet.
But all will be known soon enough.
The yen has the dollar down on the ground and us pummeling it with rabbit punches to the base of the skull.
The yen is wearing brass knuckles.
All bets are off.
Wood,
Comments appreciated. I think the bullish case is getting clearer each day–at least in the short term. Maybe people are thinking too hard trying to figure all this out. I’m just not smart enough. That’s why I rely on guys like you and my tic-tac-toe charts to boil it all down.
Can someone tell me why I keep hearing that we are ‘ovsersold’ and that is why we are rallying? The DIA went from 118 to 126 in a month. SPY from 127 to 137. All the indexes are close to their 1 month high. How the hell are we oversold?!!?!? Also, whats wrong with taking an opposite view of you or challenging it? If you can’t take it, I’ll stop.
SIA,
RSI(2) is a very good short term indicator for oversold and overbought market conditions, keyword being short term. Instead of arguing about it, pull up a chart of the Naz or any other stock with RSI(2) on it and see what it does when it hits extremes, i.e. below 10 and above 90.
The market is like a rubber band. Stretch it too far up, and it snaps down. Stretch it too far down, and it snaps up. RSI(2) measures the tension in that rubber band and let’s you know when it may be ready to head in the other direction. Not a guarantee, of course, but it is very useful for timing trades.
Hedge funds manage billions with complicated mean reversion strategies, RSI(2) is the poor man’s version.
If you don’t like it, then don’t use it. There are too many ways to make money in the market to waste time insulting each other’s methodologies.
I’ll post results of a mechanical RSI(2) trading system for QLD and QID on my blog later tonight. Maybe that will help you understand why we find it useful.
Backtest results now available here.
SIA- Intermediate term, the SPY is more overbought than oversold. I judge intermediate by the weekly chart. However, the MACD is getting ready to cross bullishly, on that time frame.
In the short term (a few days) the markets were oversold.