I know this chart is more cluttered than my usual charts. Bear with me, as I have a lot I want to cover.
1. Friday’s Turkey Rally high must be exceeded, soon. This will make a higher low (Monday’s 7.7% day) and then a higher high. This is the very first step in establishing a new trend.
2. The downtrending line I’ve drawn from September through today’s close must be broken, and the index should close above it for at least 2 days.
3. The 50 day average resistance at 9082 and whole number resistance of 9000 should not be ignored. However, should the index blow through this area, such a strong move should also not be ignored. Closing above the 50 day average will be evidence that a trend change has begun.
4. 9500 is an important area, as getting above that level will see the Dow clear a 3 month congestion zone, and will allow the index to run for the 200 day average.
5. RSI2 is beginning to hang out in the overbought zone and as been bouncing quickly from oversold conditions.
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I’m bullish here, and will be willing to leg into long positions again as soon as I see a higher high. I do not know how far a bear market rally will take the Dow, but a run from 8,000 to 10,500 would be worth 24%, and seems reasonable. A run to 9500 is worth 10%.
I like mental or hard stops set to trigger with a Dow close beneath 8,000, combined with stops set to an appropriate (small) risk level for each position.
As for taking profits, that is always the hardest decision when trading discretionary plays. Scaling out of positions at various resistance areas might make an interesting way to play a bear market rally.
Added Bonus: Rob Hanna’s recent post about market returns based on where the SPX is trading relative to the 50 and 200 day averages.
As noted earlier, Woodshedder is a man of honor and great intellectual prowess.
Further to these assertions, JakeGint is a man of questionable scruples.
Woodshedder, please, do speak of the honeyhole on go forward basis.
Kind regards,
mdawsz
i would like to see it play out the way you have described it. having said that, you can still get a higher low at any level above lows and higher highs above turkey week. do you have a problem with that?
9500 seems reasonable.
My upside target is 9200-9500, if we can get past 8750.
Chivas, to be clear, Monday’s low must hold. I see it as the last shakeout before the trend bends. Becuase Monday’s low and Friday’s high are fairly close (lol 7%)I doubt seriously the Dow can trade in that range for more than a week or so. Because of that, I am most closely watching those two areas.
As for any rally, I think one has to follow his convictions, pick his positions and decide on acceptable risk, and then hang the hell on. Easier said than done.
Fly,
My upside target is 9200…THOUSAND in my trading account.
Best wishes and kind regards,
mdawsz
Sawzall — you wouldn’t know a “scruple” from Matt Hoople.
Now why don’t you hop in the Chevy and go chase a bail jumper, or whatever it is you do …
_______
we have a slight disagreement. although i think monday’s lows will hold, i think it is not a must that they do.
Monday’s lows will get raped within 1 month. Write it down, assholes.
JakeGint,
Please, sir…I know not about that of which you speak. However, you sir, need not use so many monikers.
Kind regards, best wishes, and all the best,
mdawsz
Shed, I don’t believe what you’ve outlined fits the definition of a head and shoulders although I see the pattern and breakout potential.
The pattern is supposed to be symmetrical between the head and shoulders and this one isn’t. Also, volume is supposed to be decreasing on the right shoulder vs the left shoulder. It is.
filled this in with all the relevant info, scored poorly
http://thepatternsite.com/schsb.html
Fly,
Your comments remind me of the sound my mustard nozzle makes when I am making a ham and tomato sandwich at 11:52am PST. (Cheese and lettuce too)
Kind regards, best wishes, and all the best,
mdawsz
Fly – Don’t you read my update stats?
Of course.
We had 300 buy strength compared to 2200 sell strength on Monday. LOL
MDAWZ:
May your next bride take you for all of your fiat currency, then shove you into a coffin, made from pineapples.
Good Day
Danald,
You sir, my good friend and learned one of technical charts and market timing, have found a good website pertaining to the art of technical analysis.
Please visite here: http://thepatternsite.com/chartpatterns.html …to learn more about Mr. Bulkowski’s learned ways.
Kind regards, best wishes, and all the best,
mdawsz
Danny, that is why I said it would “shape a rough inverse head and shoulders pattern.”
Emphasis on “rough.”
I’m just saying it could further develop, but regardless, some people will see it as bullish, even if it is not near perfect.
I agree with your last comment and whatever it is, it will be bullish, but yeah, super emphasis underlined on ‘rough’ as far as the actual pattern is concerned.
Monday’s low will be broken tomorrow or Friday at the latest. Write it DOWN.
http://thepatternsite.com/hsb.html#HSB1
The above links to Bulkowski’s description.
To all commentators,
It has been a pleasure engaging you fools regarding market machinations. At this point it is imperative, but with deep regret, that I retire to my quarters in order to prepare for tomorrows market massacre of retards on the wrong side of this discombobulated market.
Kind regards, best wishes, and all the best,
mdawsz
PS: I posted a new comment on Ducati’s preposterous blog.
Macdonovans —
I hope this note finds you cordial in spirit and large-bellied with victuals. The massacre will be deep and long. I hope you rendered Ducati’s blog burnt, and in shambles.
Kindly, and good day
-Donald
DOW 50,000!!!
EW guys and Wood are in agreement:
896 SPX must be taken out and 816 SPX is critical hold to keep the uptrend intact. Many have predicted 12/4 – 12/5 as a CIT (chg in trend)event. While some fear a short term reversal down others think that breaking 896 SPX confirms a chg in trend up which could be monstrous and be the last chance to dump your longs close to where they were bought. That of course will be followed by the final leg (Wave C) down.
See Erik’s comment from OEW below … interesting perspective.
Eriks’ comment from OEW:
“I want to say that a B wave or WAVE 4 up will *feel* corrective, because it is. It’ll be choppy.
Keep in mind that when everyone starts writing off the economy, expect a rally. I think we may be there NOW, if not real soon.
Either way, Tony’s B wave will completely retrace and bring serious pain to the markets. Timing *when* this will occur is going to be hard…. it can only happen AFTER B completes. When “C” starts, you don’t want to be in the market (if it hasn’t happened already from a 2000 top).
I’m beginning to see several impulsive waves counts come to a potential close. Divergences abound. Tech is going to take off. Look at NVIDIA for example. I feel it’s going to the 200 MA. AAPL, RIMM, GOOG all are displaying *possible* wave C completions and support a fairly substantial rally before heading to new lows.
What makes daily wave counting difficult is realizing that at some point a reversal happens… and reading the waves at the intersection is tough. Take a step back and realize that there is a bigger picture.
SDS, SKF are being pounded after a few impulsive looking waves up earlier in the week… now we’re seeing impulsives down. *SOMETHING* is happening here folks. I see corrections on *both* sides of the aisle.
I’m not calling the bottom, but I see probable follow-through to the 960/1000 levels I’ve been waiting for.”
Senor WoodShedder,
Look at FXI…rovering around 50EMA looking for a breakout. That should be awfully bearish for the likes of FLY and his egregious position in FXP, no?
Still a VIX above the 50EMA will prevent me for being bullish.
What do you think?