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Even today's price break does not negate what I consider to be a bullish
consolidation pattern. I managed a nice trade on Thursday's upside breakout
from triangle but did not short the downside breakout from today's triangle
simply because I do not see downside momentum but rather, for time being, a
lack of upside momentum. That is not to say, however, that I do not see
issues which bear watching, nor will I hesitate to turn on a dime. The
market is dangerous and will remain so until debt and currencies settle
down.
Earl
-----Original Message-----
From: Ira <ist@xxxxxx>
To: eadamy@xxxxxxxxxx <eadamy@xxxxxxxxxx>
Cc: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Friday, October 23, 1998 5:27 PM
Subject: Re: MKT Rally on light volume
>Postulate all you want, as long as the price keeps rising this cycle is
>bullish. I have yet to get a sell signal on this leg. One could back
spread a
>position at this time and if a violent break takes place, clean up. If the
>pattern follows,. Monday should be the opposite of today, expiration
Friday,
>therefore up. You can write the scenario of what you think will happen, but
the
>market will do its thing and burn you 90% of the time. Trade your system
not
>your feelings. If the system is good everything will be fine and you won't
miss
>a thing. The facts are interesting though. Good trading. Ira.
>
>Earl Adamy wrote:
>
>> The recent high in the S&P is about 10 points short of the .618
retracement
>> of the entire decline July 20 - Oct 8. Breadth indicators, such as daily
>> McClellan Oscillator and Summation, are nicely confirming the rally from
the
>> October low. One of the more puzzling aspects of the rally from the Oct
low
>> has been the relatively light volume on the futures whether one measures
by
>> contract volume or net tick volume (net intraday up/dn ticks). Ditto for
the
>> SPY (S&P depository receipts) which has always provided good volume
>> confirmations and does so without the reporting lag of the futures.
>>
>> We are currently in the range of the 9/23 high on the S&P: on 9/23 high,
Net
>> tick volume was plus 4 while it was minus 84 at the 10/20 high. Similarly
>> OBV on daily futures data showed 12650m on 9/23 and 12370m on 10/20.
>> Similarly OBV on SPY shows 28703m on 9/23 and 22041m on 10/20. (Values
will
>> vary depending upon starting point - it is the comparative relationship
>> which is important).
>>
>> The talking heads would have us believe that a bear market rally must be
>> sharp and strong on heavy volume and narrow breadth - not what we are
seeing
>> here. Further, we do know that huge sums are flowing into money market
>> funds, yet it doesn't look like this cash is being committed. Given the
size
>> of the rally to date, I frankly would have expected to see at least one
500+
>> point Dow day fueled by panicked buyers.
>>
>> So all is not what is seems here.
>>
>> Earl
>
>
>
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