Thursday, September 9, 2010

How much juice can we squeeze out of this lemon?

 It is all about $Rut today.  It is the most speculative of all the indices.  It is made up of small stocks and they fluctuate a lot more than SPX or DOW.  I primarily play TNA/TZA which is based on $Rut.  The four charts you see are the four lows that $rut made in its decline from 746 to 588.  In the first decline from 746 to 638 (flash crash) $Rut snapped back 75% to 719. (A1). After making the second low at 618 $Rut snapped back only a little over 38.2% at 667 (B2).  From the third low 607 market recovered 50% to 677 (C3). 

On the final low at 588 the $Rut snapped back over 50% to 672 (D4).  Every time we have had a decline $Rut snaps back at least 38% or 3/8 of the decline.  The highs have been lower high albeit by a very few points and the lows have been lower lows.
Once again we are rallying from a low but the this low is not a lower low (588 and previous low 587) and should we go up make a higher high it would be the first indication of a trend change.  With September syndrome and option expiration next week it will take some major news making to move $Rut and the market  none the less it will be worth keeping an eye on.  I will continue to depend on DMRM (I have made some changes to this and have mentioned it in our CIL) and other indicators.  It was DKOD to the negative side on Thursday.

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