Pages

Wednesday, August 11, 2010

Everything has probability




The markets really did a number this week.  A well thought out trap was set on Friday and rally began Friday afternoon that ended on Monday. Tuesday was FOMC minutes and a great day to trade.  Dino's rule o three applied nicely. First move isthe right one Second is false and third is profit zone.  After the release market went 1 up (ignore) , 2 down (buy) 3 up (sell).  I took advantage of the market mechanics and bought on two and sold on three.  Late Tuesday and today have been nothing but bloody murder.  TZA which was left for dead in the water came to life from the low of 30.06 and closed at 35.75. 10/20 cross that I have been high on did an about face and went from down signal to up signal.  That usually causes a 20% reversal  On TNA that comes to 33.  SPX is very close to its support around 1088 next point is 1075.  Those horizontal lines are drawn at every eighth from high to low.  In FreeStockCharts one can set these horizontal lines to screen position and when one moves the time, the highs and lows are always divided into eighth.  My buddy Sylvanus pointed out when TZA/TNA  or FAS/FAZ declines 7/8th of the previous rally there is a new rally.  The daily TZA shows that.  By that token TZA may move up to 39.5.  The last chart is SPX daily.  Applying the 7/8 to the rally from 666 to 1220 brings it to 735.  That is scary situation.  These horizontal lines give a very good perspective and I use them a lot.  The Market is in a decline and there will be a rally I will use DMRM to hop on when the rally comes. I do not want to pick a point as a low for the probability is plainly put against it. My twitter updates are thru Dino_007.

1 comment: