Wednesday, April 28, 2010
Long jump from 40 points to P3
It was worth looking at yesterday's close as we started trading today. FAS closed at 98.15 from a low of 97.53 that is less than 1% from the bottom. It is one of my observation that When FAS closes at the low or near low ( within 1%) next day morning is reflex up move. Which we got today as FAS moved to 103.95 and that is $5.75. On the downgrading of Spain debt FAS moved to 99.42 and I went short precisely at 100.62. The FED releasing of the minutes did not bring anything to the Market up or down. There are three trades that one can potentially make. (1) First move usually up (2) counter to 1 and down (3) back up and higher than 1). The second and third moves are much more realistic to play. These are very fast moves. I am talking less than 10 minutes long and I have done them quite correctly many times. I ignore first and do the second and third. Today nothing much happened that was buzz kill. Flat O Flat all day. Near close FAS came back down to 100.1 and I bailed out at 100.28 not much money. Just didn't feel good enough to carry the short home. The big news to me was today was an inside day. On Almost all ETFs and SPx we got a LH and HL. Inside days are pauses before continuing the trend. There is an excellent chance tomorrow would be an outside day. Because the range was very small today and can easily expand. My DMRM is giving very small profits or small loss. This happens when the trend is not clear.
I plan to switch to giving more attention to DOMA and trade based on that. 60 min DOMA 77 is what I will be using. That will reduce the number of trades and put me on a better hitting average. The chart on the right is TNA. Its Doma is 103. As with any decline the perma bears will come out of hibernation to claim that it is the end of the world and show parallels to as far back as 1930 or as recent as 2007. I take these with a grain of salt as they have been calling for the end of P2 and start of disastrous P3 for quite sometime now. Grand is one of our unbiased EW analyst on CIL and you can get his superb expertise in our chat room. I am bearish will stay that way until I see a 1206 or better on SPX.