Before today's report, I want to say two things first:
1. I still think there'll be a rebound. After all, oversold like 7.0.1 Extreme NYADV and NYMO Readings Watch is rare, worth of betting. So I took long last Friday. Well, the point is how much? 2% of my total capital. Yes, I didn't write it wrong, it is 2%.
2. I've noticed accidentally that since last November, all my losing trades were LONG positions, there was not a single losing SHORT position.
So, what the above tells me? Long is dangerous when the primary trend is down, no matter how good chances the TA signal says.
Today's Russell 3000 Dominant Price-Volume Relationships was 1666 stocks price down volume down. This is a bad news which means no panic, therefore we may see another sell off tomorrow. The good news is we might have an intraday reversal tomorrow.
The reason for an intraday reversal: 7.0.3 Extreme TICK Readings Watch, when TICK closes bellow -1000, the next day tends to have an intraday reversal. So ideally, SPX may drop bellow the 1997 low at 729.55 to fulfil the prophecy made by 1.2.0 INDU Leads Market first, then reverse higher tomorrow. From the chart, we can see an exception in last Nov, so the worst case, the market could rebound the day after tomorrow.
I won't mention all the oversold/positive divergence signals today, they were all in 02/20/2009 Market Recap: Finally Oversold, still there and more oversold.
7.0.1 Extreme NYADV and NYMO Readings Watch, the "ultimate" oversold signals, day 2 bellow oversold. The worst case is the last Oct, rebounded on day 4. Hmm, if rebounds on day 4 then it fits for chart 7.0.3's worst case prophecy, interesting.
0.0.3 SPX Intermediate-term Trading Signals, intermediate-term NYADV and NYUPV are oversold. Market usually rebounds when NYUPV (red curve) crossover above NYADV (blue curve), we're not there yet, be patient.
I heard lots of saying that oversold can be more oversold, so if you believe that this market can drop another 6 days or more and therefore want to short now, here's a chart for you: 1.1.7 QQQQ Outperforms SPY Good Sign?, QQQQ may just start dropping. For me, it is true there're no 100% correct TA signals and extremely oversold may or may not work this time, but as I kept saying before, I try my best not to think that this time is different and therefore because of the extremely oversold conditions, I shell still see a rebound. :-)
Cobra:
ReplyDeleteGreat analysis as always. Thank you for your insight.
I have one question:
You said: "I heard lots of saying that oversold can be more oversold, so if you believe that this market can drop another 6 days or more and therefore want to short now..."
Why did you say: "...if you believe that this market can drop another 6 days or more..." ???
Why is it a criteria for the market to fall for 6 more days?
Please explain.
Also, (and perhaps this is related to the question above): Do you have target time horizons for your trades? If so, what are they?
You mean my trade for long? I think SPX around 800.
ReplyDeleteI was kidding about "dropping for another 6 days" since bears in my Chinese forum are trying to scare bulls (like always) with "oversold can be more oversold".
Where is your Chinese forum?
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