Thursday, July 01, 2010

Ready to bounce?

I spent the better portion of the trading day with CNBS on in the background today, listening to them drone on and on about the "death cross." They must have mentioned if a thousand times during the day. The only thing that makes me paranoid here is they were also suddenly technically aware of the head and shoulders in play last July, and we know what happened after that. But for now, and for me at least, this isn't the same thing. Statistics seem to favor bull markets no matter what is going on with the moving averages, and for certain, bounces will occur, but it seems to me if CNBS has to make a huge deal out of this technical marker all day long I don’t smell a bouncing cat, I smell a rat. The late afternoon commentator on there actually tried to spin it into a bullish sign- I kid you not! Anyway, let's make sure we are aware the cross-over is in play, as well as the full spectrum of MA cross unders and other technical markers we stay on top of. Watching the very same cross-overs in multiple global, other index and indicator charts over the last few months helped us all tremendously get short in front of this move down. Does past history guarantee the same results? Of course not. Looking back there are plenty of instances where the DC took place and the tape bounced back up, but what's more important than just the 50/200 cross-under is the complete bearish order of most, if not all shorter term MAs here. I was taught in the simplest of terms: when the MAs are in bearish order, short the bounces. And so it goes for me until that changes on the daily charts. Tell the $SSEC chart the DC doesn't matter. HA! Another thing I was taught was to simply look at the direction of the MAs. Are they pointing up or down? Top left hand side of the chart to lower right, or the other way around? Believe me, this isn't rocket science. Lagging indicator? Yes, but technically important, lagging or not, and further resistance to price advances. Okay- the Death Cross Queen is off her soapbox now, and let's look at some charts, and see where we’re at. We know the shorter term time frames are in the oversold zone on many charts, but not all. We know this could bounce, but our job needs to include figuring out where the bounce ends should it be the real deal, and be ready to take the other side of the trade as best as we can and when we can. By the way traders- you have done a stellar job of not only trading this week, but keeping each other informed and ready to go. You're in the zone for sure. Congratulations to all of you. I'm extremely proud of everyone. I will be away for the weekend and into the first part of next week, so if I don’t get a chance to say it before then: please have a wonderful holiday weekend and stay safe and sane. :-)

Btw: for cycle watchers, I played with the Gann calculator yesterday and came up with this data from that, so that’s one reason I mentioned the July 11-12th time frame earlier as a potential change in trend coming up. Where it says SD it means “Secondary Date,” PD is “Primary Date.” Most of you loonies also know July 11th is a full solar eclipse and new moon as well. Additionally, post bell on the 12th is the kick-off to earnings season with AA out of the gate.

Gann calcs for July 11-12
5/12 pivot - July 11 S/D
6/1 pivot - July 11 S/D
6/21 pivot - July 12 S/D

spy_eod_7_1 qs_eod_7_1
nymo_eod_7_1 nysi_7_1

JoeyN’s chart on XII (thank you, JN)

jn xii

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