The market is going up, not down.
The most bullish thing a market can do is go up when it should go down. Today should have been a Short Sell Day. On a Short Sell Day, the day should end low. The market's decline for the day stopped @ 1320. Also, the first of the month has been bullish as of late. March 1 should be an up day to reflect a new infusion of cash from the public. Finally, a bull flag pattern on a 15-minute chart is about to resolve upwards.
For these reasons, I am 100% in the C Fund as of 1325 on the Standard & Poor's 500 Index.
Don't fight the trend.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Monday, February 28, 2011
Saturday, February 26, 2011
The Next Two Days
We are approaching the turn of the month, the transition between February and March. This is an important and significant time. Consider these two observations:
1. The Three-Day Method suggests that market action is driven by powerful forces. Sometimes the market is driven down in order to create a buying opportunity. Sometimes the market is driven up in order to create a selling opportunity. The general idea is that there are roughly three types of days-- a Buy Day, a Sell Day, a Sell Short Day. A Buy Day is when the low of the day occurs early in the day. The market closes at its high. A Sell Day follows a Buy Day. The low of the day occurs early and the high of the day occurs late in the day. Powerful forces use this day to sell securities and contracts acquired the day before, i.e. the Buy Day. Finally, the Sell Short Day is the next day. The high of the day is made at the open or shortly after the open. The market then drops and closes at the low of the day.
If you accept this picture, then Thursday's low of 1294 on the Standard & Poor's 500 Index meant that Thursday was a Buy Day. This was a day to buy as a short-term trader. Friday was a Sell Day. Notice how the market opened at the low @ 1307 and continued up throughout the day until hitting a high of 1320 and closing @ 1319. Ideally, powerful forces that purchased S&P futures on Thursday were using Friday to sell into strength at higher prices.
So, Monday should be a Sell Short Day. This would be a selling opportunity where the market is driven up at the open and then sells off throughout the day. Look for an open around 1320, Friday's high, and then for the market to sell off throughout the day.
2. Tuesday, March 1, is the first day of the month. For the past few months, the first day of the month has been characterized by buying pressure. I would think that Monday should also be a Buy Day since it follows a Sell Short Day, Monday. If March 1 is an up day in the market, monitor the volume. If the volume is extremely low, then the rest of the week would be down.
Have a great day!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
1. The Three-Day Method suggests that market action is driven by powerful forces. Sometimes the market is driven down in order to create a buying opportunity. Sometimes the market is driven up in order to create a selling opportunity. The general idea is that there are roughly three types of days-- a Buy Day, a Sell Day, a Sell Short Day. A Buy Day is when the low of the day occurs early in the day. The market closes at its high. A Sell Day follows a Buy Day. The low of the day occurs early and the high of the day occurs late in the day. Powerful forces use this day to sell securities and contracts acquired the day before, i.e. the Buy Day. Finally, the Sell Short Day is the next day. The high of the day is made at the open or shortly after the open. The market then drops and closes at the low of the day.
If you accept this picture, then Thursday's low of 1294 on the Standard & Poor's 500 Index meant that Thursday was a Buy Day. This was a day to buy as a short-term trader. Friday was a Sell Day. Notice how the market opened at the low @ 1307 and continued up throughout the day until hitting a high of 1320 and closing @ 1319. Ideally, powerful forces that purchased S&P futures on Thursday were using Friday to sell into strength at higher prices.
So, Monday should be a Sell Short Day. This would be a selling opportunity where the market is driven up at the open and then sells off throughout the day. Look for an open around 1320, Friday's high, and then for the market to sell off throughout the day.
2. Tuesday, March 1, is the first day of the month. For the past few months, the first day of the month has been characterized by buying pressure. I would think that Monday should also be a Buy Day since it follows a Sell Short Day, Monday. If March 1 is an up day in the market, monitor the volume. If the volume is extremely low, then the rest of the week would be down.
Have a great day!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Friday, February 25, 2011
Market Conditions - Bounce on Low Volume
Today, we had a bounce on low volume in the market. Usually, sustainable bounces are supported by higher volume, not lower volume. This pattern is consistent with a bounce that will not hold. I think we will see the S&P 500 Index bounce through March 1 and up to around 1327ish. That would be a good level for shorting the Index if one were so inclined.
Otherwise, watch what happens after March 1, the first of the month. Since August, the first of the month has been followed by a burst of upward momentum. This time might be different. Watch the volume on Monday and Tuesday since price follows volume.
Later.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Otherwise, watch what happens after March 1, the first of the month. Since August, the first of the month has been followed by a burst of upward momentum. This time might be different. Watch the volume on Monday and Tuesday since price follows volume.
Later.
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Thursday, February 24, 2011
I'm Back
The past month has been a busy time for me in the day job. Barbara gave me a kind phone call to catch up and to remind me that I was missed in blog land. I'm not sure what happened in February but my work load seems to have picked up. So, I apologize to my readers for dropping off the radar for a bit.
I will have more to say over the coming weeks.
From what I can tell, the market seems to have made a short-term top on Friday, February 18, 2011 @1344. The breakaway gap down on Tuesday morning confirmed the sharp correction that we are currently experiencing. Now is the time to watch and wait for a high probability setup. Today, the low was 1294 on the S&P 500 Index. This level is important for the next few days. Should it break, expect a decline over 4 or so days to 1227.
That would be a buy point, 1227.
I'm still expecting a significant low in late May but, for now, watch what happens @ 1227.
Later,
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
I will have more to say over the coming weeks.
From what I can tell, the market seems to have made a short-term top on Friday, February 18, 2011 @1344. The breakaway gap down on Tuesday morning confirmed the sharp correction that we are currently experiencing. Now is the time to watch and wait for a high probability setup. Today, the low was 1294 on the S&P 500 Index. This level is important for the next few days. Should it break, expect a decline over 4 or so days to 1227.
That would be a buy point, 1227.
I'm still expecting a significant low in late May but, for now, watch what happens @ 1227.
Later,
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Monday, January 31, 2011
Friday-to-Monday Momentum Break Pattern
Friday was an extremely weak day in the market. We had a true selling day on Friday across the board. Today is shaping up to be a strong day. Today is Monday. Today is the last day of the month. Consider this passage from trader Gary Smith:
"One of my more reliable momentum patterns over the years has been the Friday-to-Monday pattern. Stronger-than-average strength on a Friday is expected to be followed by more strength on Monday (or Tuesday if Monday is a trading holiday). Conversely, extremely weak price action on a Friday is expected to lead to more weakness on Monday. A Friday-to-Monday momentum break pattern occurs when the expected strength or weakness on Friday doesn't carry over to Monday. These weekend momentum break patterns are highly significant and indicative of a short-term trend change."
Source: Gary Smith, How I Trade for a Living, page 112.
If the market closes up today, then the momentum pattern has changed on a Monday following a weak Friday. Thus, I would change and revise my top target from 1294 to 1320. The volatility should increase between now and the end of February.
Have a good day!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
"One of my more reliable momentum patterns over the years has been the Friday-to-Monday pattern. Stronger-than-average strength on a Friday is expected to be followed by more strength on Monday (or Tuesday if Monday is a trading holiday). Conversely, extremely weak price action on a Friday is expected to lead to more weakness on Monday. A Friday-to-Monday momentum break pattern occurs when the expected strength or weakness on Friday doesn't carry over to Monday. These weekend momentum break patterns are highly significant and indicative of a short-term trend change."
Source: Gary Smith, How I Trade for a Living, page 112.
If the market closes up today, then the momentum pattern has changed on a Monday following a weak Friday. Thus, I would change and revise my top target from 1294 to 1320. The volatility should increase between now and the end of February.
Have a good day!
Wink
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Tuesday, January 25, 2011
Market Conditions
I normally don't like to blog during market hours because (1) the last hour of the trading day is the most important hour of the trading day and (2) the closing price is always in question until the close.
But I have some free time during lunch, so here goes....
The market's behavior is consistent with a developing top. The market dipped down to the 13-day moving average. Buyers came in to buy the dip. I was then looking for the market to rocket to new highs and to take out resistance @1291. Instead, the market stalled out @ 1291. Q: What does this retreat tell me? It tells me that resistance is beginning to matter more and more. In a raging Bull Market, resistance is cut through like butter. We are far from that condition now.
I think the market will power higher than 1291, however, it may or may not happen today. Even though I am bearish, I actually want the market to bounce higher above 1291 and 1296. Why? Because a higher high with a lower high in the Relative Strength Index (RSI) will set up a nice negative divergence that can be sold. As a rule of thumb, a negative divergence is a desirable set up and trading opportunity. It doesn't happen often but it is worth waiting for.
The time is now 12:37 in San Diego. The market will close in 23 minutes. The opening price was 1288.17. So, I want to see how the close correlates to the open. Will the close be higher, lower or the same level as the open? We have had a ten-point range day, so today will not be a narrow range seven (7) day.
Some days are days of opportunity. Today is just a day for watching the market and taking cues from the price action.
Later.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
But I have some free time during lunch, so here goes....
The market's behavior is consistent with a developing top. The market dipped down to the 13-day moving average. Buyers came in to buy the dip. I was then looking for the market to rocket to new highs and to take out resistance @1291. Instead, the market stalled out @ 1291. Q: What does this retreat tell me? It tells me that resistance is beginning to matter more and more. In a raging Bull Market, resistance is cut through like butter. We are far from that condition now.
I think the market will power higher than 1291, however, it may or may not happen today. Even though I am bearish, I actually want the market to bounce higher above 1291 and 1296. Why? Because a higher high with a lower high in the Relative Strength Index (RSI) will set up a nice negative divergence that can be sold. As a rule of thumb, a negative divergence is a desirable set up and trading opportunity. It doesn't happen often but it is worth waiting for.
The time is now 12:37 in San Diego. The market will close in 23 minutes. The opening price was 1288.17. So, I want to see how the close correlates to the open. Will the close be higher, lower or the same level as the open? We have had a ten-point range day, so today will not be a narrow range seven (7) day.
Some days are days of opportunity. Today is just a day for watching the market and taking cues from the price action.
Later.
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
Monday, January 24, 2011
Market Conditions
The S&P 500 Index opened today @ 1283.29. The low was made early in the day @ 1282.47. The market gradually drifted higher throughout the day before making a high @ 1291.93 and closing @ 1290.84. Today was a bullish day because the close was higher than the open. However, the volume was less than Friday's volume. I read less volume as a lesser commitment by institutions, funds, and wealthy individuals compared to Friday's price action.
What catches my eye about today's action is the Relative Strength Index indicator (RSI) on a daily basis. The RSI heading has dropped below the 70 overbought level and closed @ 67.81. The reading is heading higher towards 70. What I am looking for is a higher price action on the S&P 500 Index and a lower RSI reading then the last week's high. In other words, a reading higher than 1295 with a RSI reading below 70 would say to me that the market can be sold short. That's the setup.
We remain in a well-defined uptrend on a daily basis. The 13-day moving average is above the 50-day moving average. The 50-day moving average is above the 200-day moving average. Trend followers will "buy the dip" in anticipation of higher prices ahead. That strategy has worked since December 1. True believers in trend following will have bought Friday's dip in price down to the 13-day moving average.
In the next 1-3 days, I am looking for either (a) a new high @ 1300 or (b) a new dip to the 1274 level. The new high on a negative divergence with the RSI reading would be ideal. The new dip would just be a short-term buying opportunity until a new high is reached.
The scuttlebutt at clearstation.com is that there are alot of sell stop orders below the market @ at the 1250-1260 level. These people are looking to lock in profits. As a result, we have the conditions in place for a quick, sharp correction when the time comes. I view 1271 as key support on the S&P 500 Index.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
What catches my eye about today's action is the Relative Strength Index indicator (RSI) on a daily basis. The RSI heading has dropped below the 70 overbought level and closed @ 67.81. The reading is heading higher towards 70. What I am looking for is a higher price action on the S&P 500 Index and a lower RSI reading then the last week's high. In other words, a reading higher than 1295 with a RSI reading below 70 would say to me that the market can be sold short. That's the setup.
We remain in a well-defined uptrend on a daily basis. The 13-day moving average is above the 50-day moving average. The 50-day moving average is above the 200-day moving average. Trend followers will "buy the dip" in anticipation of higher prices ahead. That strategy has worked since December 1. True believers in trend following will have bought Friday's dip in price down to the 13-day moving average.
In the next 1-3 days, I am looking for either (a) a new high @ 1300 or (b) a new dip to the 1274 level. The new high on a negative divergence with the RSI reading would be ideal. The new dip would just be a short-term buying opportunity until a new high is reached.
The scuttlebutt at clearstation.com is that there are alot of sell stop orders below the market @ at the 1250-1260 level. These people are looking to lock in profits. As a result, we have the conditions in place for a quick, sharp correction when the time comes. I view 1271 as key support on the S&P 500 Index.
Have a good evening!
Standard Disclaimers
1. This blog is for educational purposes only.
2. None of the individuals associated with the Las Vegas TSP Investment Club are registered financial advisors.
3. This blog is not an offer to the public to buy or sell any stocks, options, commodities or futures.
4. You are encouraged to do your own due diligence and to consult with a professional financial advisor before making any investment decision.
5. This blog cannot take responsibility for the results of your investment and trading decisions.
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