Posted: Jan 12, 08 11:37am
This information, as well as past postings is available at: tradewithpros.blogspot.com
Posted in last weeks review, the statistic held out.
An interesting S& P statistic:
The 4th consecutive day close down covers 97% of all closes down.
The 5th consecutive day close down covers 99% of all closes down.
What does this mean? After 5 days of closing lower the S&P is either flat or rallies on the 6th day.
This market opened at 723, rallied, dipped and then closed at 723.
If you traded the present trend, you took advantage of this bounce to time your entries.
Statistics are not certainty they are chance. Toss a coin and its 50/50 heads or tails. This doesn’t mean that tails cannot come up 12 times in a row, but it is statically less of a chance than heads. Trade the trend and utilize money management.
Although the above statistic came from a colleague of mine, I recommend the Stock Traders Almanac by Jeffery Hirsch. It is chocked full of interesting and helpful market data, that would cost $1000.00 of dollars as well as hours to replicate. Well worth the cost.
The trend has remained down. When bounces did occur, it appeared that large blocks were moving, which are usually institutional sellers. It also appears that selling continued every time the indexes tried to rally. The flip side of that is there is a buyer for every seller. Sellers won this week.
The swings this week were extreme as bad news continues to pour from the financial institutions and the economy in general. There is much uncertainty in the world, Iraq, Iran, the economy and even the presidential elections. Uncertainty is not good for the markets, resulting in extreme volatility.
Trade the trend, no matter what instrument you are utilizing.
DOW 30
Short Term Bearish – 12/16/07
Long Term Bearish – 11/16/07
There is now a wedge formation appearing on the DOW. The index has broke below the head and shoulder, finding some support in the 12,500, weak as it is. Meaningful support is still at 12, 350, then 12,000. It is no longer that far down to the 2003 uptrend line. A break of 12, 000 moves the market deep into 11, 650.
SPX – Standard and Poor’s 500
Short Term Bearish – 12/16/07
Long Term Bearish – 11/16/07
SPX broke its 1400 support area. Friday it closed right at it, this index is arguably above previous support but its pattern is that of lower lows and now below the uptrend line of 2003. A strong break of 1370-1380 support on the SPX and its run for the doors with no meaningful support until 1325.
NASDAQ Composite (COMP)
Short Term Bearish – 12/16/07
Long Term Bearish – 1/06/08
Under its long term trend from 2006 lows, the NASDAQ is right at its previous low of last August, support of about 2440. This index has been the strength of the four followed, it has now joined the march down fast and hard. A break here and next support is in the area of 237-2380 where we will see the long term uptrend of 2003 converge with price support. A break of that line and 2300- 2320 is the next stop.
Russell 2000 Small Cap
TREND: Short Term Bearish /Long Term Bearish
The ugly stepchild that started this whole run down, although still ugly, has yet to move to last years lows. This is a divergence from the pattern that started all of this selling. Last years lows are down near 670. The index did touch 690 support and has stayed above it. Watch the Russell closely. There is still a lot of support activity in the range of 690-720.
TradeWithPros was a huge hit at the World Money Show in London. The next appearance will be the TradersExpo in New York, Feb.16-19. Please visit www.newyorktradersexpo.com/ for more information. We met many wonderful traders and investors from around the globe in London and it would be great to meet you in New York!
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