Sunday, December 12, 2010

A lesson learned.

SPX made a HH and HL  and closed positive thats a positive for the markets.  Range was only 8 points.  SPX made the low of the day a little after 7 gradually in a 45 degree angle went up and closed at 1240. The thing to notice is spx closed at the very high of the day at 1240.40.  Close at the high of the day is not a negative for markets.  It is 65% positive. 
The chart on left spx hourly.  It is approaching the top line of the channel.  I would be really surprised if it burst thru that  channel and move up 50 points or more.  What is more realistic is that spx rides the top of the channel and then falls down to the lower half of the channel.  It took 83 hours to complete 1 and 2.  IF (BIG if) it were to take the same time we could see a flat day and good size hit in the remaining 10/12 hours..  

The two charts are of RUT.  Right  is a monthly chart hitting against the last trend line that one could draw from the top.  If that is broken the last one is 88% point at 795.  RUT is also has resistance at 790 on the daily chart.  The chart on the left is rut daily in a channel.  The median line RUT is against has proved to be a resistance 5 times and no resistance 5 times.  But looking at the other time period charts this it may be a time when this resistance holds but not necessarily immediately.  A rdie along the median is a distinct possibility.  
Also another observation of mine is after a prolonged run like the one the market is in now the first hit is fake followed by a fake rally and then comes the real good 
This is opex week.  In my books it means there will be a  on big down day to flush out calls and one up day to flush out the puts.  Since Sep it has been down first and then up.  The best part is I can play second afrer seeing the first.
I did not take a position on Fri. as I got hit.  Two things I learned one is unless all the tumblers are in the locks don't open meaning trading in anticipation of indicators turning a certain way is not a good idea.  And secondly a small hit hurts less than a big hit.  Once every 3-4 months I take one of these big hits and that actually make me trade better.  
I want to be short but am going to wait for the indicators. 

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