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Friday, December 31, 2010

Ideally.....


SPX made a LH and LL  and closed in the negative column that is negative. Range was almost 5 points.  The high of the day came at 6.45 and low came a little before 9.00.  Then a heartening rally of 75% of the range of the day failed at 12.30 and spx closed more near the low than high.  This is negative for tomorrow.  RUT on the right made the low of the day at open and HOD by 6.55 and a second top failure came around 11.30 and closed very close to the low of the day.  That is negative for RUT.  Putting both of this together there is good chance tomorrow would be a negative day.  
The chart on the left is TNA hourly.  It is clearly topping or topped.  Once it goes thru the DOMA 77 that would give a good confirmation.  In the last 5 sessions it has not gone any where.  I mentioned this in my blog a few sessions ago once the TNA rushes to the top line of the channel it just hovers around forming a top of distribution  That process is about to be complete.  The next phase is decline in an orderly fashion thru the DOMA to a rest area around the median line followed by a violent drop to the bottom of the channel.  I will be waching this very closely.  I am ready to short. 
The chart on the right is SPX daily.  There were 6  quality shorts (Red arrow) and 6 quality longs ( Green arrow).  This is what an ideal trader would have done.  My cuban friend tells me there is technique called the ideal trade technique.  If I look at a chart and mark what the ideal trade would have been  over and over I would be able to catch a  good portion of the middle span of the trade.  I believe he is right.  Ideally I would have gone long at 1173 and my next move would be to short.  The DOMA is 22 day simple moving average from one of this years best teachers I came across Adi.  SPX is being rejected by the median line.  Even though my preference would be rejection by top line median would work too. 
Lastly tomorrow is Dec 31st. a GANN 180 degree day.  Last few times it didn't do much. May be my starting date wasn't perfect.  I have been talking about this for a while.  Its here. I will watch it with interest.
Last day of the year is generally very mild day with less than 2 points up or a good size 8 pts or above hit. With year end, month end, and quarter end window dressing by the funds I am hoping we would see some action tomorrow.  
I am fully ready to go short but I am not short yet. 
I started this blog just for the heck of it and soon found it helps a few people and started putting more and more into it.  Actually the blog makes me stop and think and that makes me a better trader.  
Real thanks to all of you  for reading my blog and offering me encouragement.  

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