The setups I include on this blog are used in conjunction with the 3/10macd and the criteria I ascribe to it as a way to alert me to an existing condition of price. The key concept to take away from this blog is that I try to anticipate what will happen on the higher time frame by using a faster time frame to trigger the trade setup. I do not trade a "system" I use two indicators to clue me in to price conditions. Please read the Disclaimer located in the sidebar of this site. I can be contacted via email at
I am always open to questions, comments, or suggestions on how to improve this blog.

Friday, February 5, 2010

How Nice Was That!?

A stellar late-day rally to close the day (and perhaps this recent downtrend) in a Hammer candlestick (except for the $INDU, which saw a Long-legged, Higher close than open, doji's).
Take a look at the Russell2000 Index, especially what has happened in the past preceding this type of candle pattern.The close of this day had the feel of more than just a short-covering-into-the-weekend type of day. It had more of a jostling to get on board for what may be a decent bounce into Moday feel.
The SPY hasn't seen this much volume in quite some time:There's no certainty that we will get a bounce higher on Monday, but the odds do lean that way.
Here's a look back in 2008, when volatility was high, and selling was non-stop (and nervous short-squeezes were common after fresh lows), I outlined what has followed a day where price opened slightly higher, sold off to make new low in the downtrend, then rallied to close higher on the day. On the Q's:
I used the Q's as an example, because the SPY didn't have as many occurrences (Higher open, lower low, higher close in a down trend), but the herd mentality/psychology is the same. Here are some examples from the SPY in '08.
Should we get a sizable bounce from here, and healthy consolidation, we'll have to start watching retracement levels for the possibility of something like this;Higher Highs, Higher lows! :0 Not saying it's probable, just the possibility.

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