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Turnaround Wednesday
You won't find this term in the bibles of trading and investing. And
you won't hear the folks on CNBC say "Turnaround Wednesday" like
they refer to "January Effect" or "Earnings Season."
They're missing the boat. After watching chart action for a good
five years, we're convinced that Wednesday is a key reversal day for
the market. When conditions are right, Wednesday is a turnaround
day around 80% of the time.
Simply put, if the market moves strongly in one direction on Monday
and Tuesday, it will likely head in the opposite direction
Wednesday. If the DOW is up 75 points Monday and adds 120 on
Tuesday, odds are that the index will give back some points on
Wednesday. Likewise, if the DOW sheds 100-200 points Monday-Tuesday,
the index will gain ground Wednesday.
We've watched this occur dozens of times. Why it occurs, we don't
know. It could be as elementary as longs taking profits after
several days of strength, or shorts covering winning positions after
several days of weakness. It could be the complex influence of buy-
sell programs launched by the big intuitions. It could be the
alignment of the planets. All we know for certain is that Turnaround
Wednesday happens, time after time.
The key is the strong move Monday-Tuesday. If Monday is up and
Tuesday is down, or vice versa, the action for Wednesday depends on
other factors.
So if you are planning to enter or exit a position, reallocate 401
(k) mutual funds, etc, make sure to check the market action on
Monday-Tuesday for signs of a Turnaround Wednesday. It can put you
on the right side of a trend.
http://clix.to/wallmann
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