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An interesting short-term situation has developed in the
SP 500 December futures contract. Indications are for
possibly extreme lower prices by Friday. Here's the
analysis:
The Fear Index reads greater than 99%. Historically,
over the last year, the SP has experienced price drops
ranging from 50 to 150 points within 4 days of high
DFX readings. This indicator is 4 for 5 this year, so
the odds are : 80% probability prices 50 to 150 points
lower in the short-term.
Counter-trend Tuesday's -- This effect is often seen in
the SP. Tuesday's tend to reverse the short-term trend.
Odds are : 56% probability lower close.
Day 6 High/low effect -- The SP tends to trade from 6
day highs to 6 day lows. If we hit the highs of 3 days
ago, expect to see some monster sell programs. On lower
prices with no higher highs, expect a challenge of the
most current 6 day low.
Modified Taylor Method -- This indicator says today is a
"Sell" day. If today's close is higher than it's open, and
price touches the high of 3 days ago, then the odds will be
80% that Wendsday will be the "Sell" day. If the "sell" day
is completed today, expect a short - term "short-sell"
up day on Wendsday follwed by an ambivalent Thursday. Today
is important to this method and the SP. Friday's action will
tend to mimic today's action.
Fuzzy Gaps -- This indicator uses fuzzy logic to locate
logical gaps that may not be represented by price action
Here is the statement, and the odds: If today's Open is
greater than yesterday's close, and today's Open is less
than yesterday's high then there is a 73% chance that
prices will close lower than yesterday's close, and a
47% chance that prices will close lower than yesterday's
Open.
Walt Downs
CIS Trading Cos.
http://cistrader.com
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