Here is the ascending triangle tony was looking at, Trying to look at it impartially. What I see is that the trend line on top has only been tested twice. The other trend line is the uptrend, This is where I get a Bias... The more times a trend is tested the more likely it is to break. The first trendline tested is usually where the bias is to be broken.
6 times is amazing for that test. And there are some things that get me "Cautious here"... But I'd rather play it on the other side of this "decision point".
This is common behavior before a breakdown, for the market to "Toy with" the trend it just broke.... It's also how bear and bull traps get set...
There is sort of an upside bias for Christmas week. Last year and the year before, the top of the market was about the 14th of December.
Friday, December 19, 2008
Chart for Tony
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3 comments:
Thanks for the chart. This is the triangle pattern that I have been seeing and the price movement is being squeezed between the up-sloping support and the flat resistance.
I agree that something decisive is going to happen and it looks like it it trickling below support. I saw this Fri afternoon and opened up more hedges on my long for risk positions for risk management.
Thanks again for the chart analysis and also the history of the mythical "Santa Claus rally"; It seems the market tries to fulfill this prophecy every year, but fails.
The other mythical entity is the January rally" when everyone supposedly is funding IRA's or something (never mind that we have until April to fund the previous year). But I do think that these things add an upward bias and perhaps mitigate otherwise bigger losses during these time frames.
I guess we can analyze these thing ad nauseum, but another reality is that most traders and investors have already realized enough losses for the year, and without many winners, the end of year selling may be less this year.
Thanks again.
In these positions I'm looking for "Tells",
One of which is when you are looking at "Which resistance will break?" it's usually the one most tested.
Also Looks of Distribution/accumulation.
and the level of retracement of a rally
To me, Waiting for a Christmas rally, feels like musical chairs.
There is a bias a day or 2 into the first of every month. But that up bias can be just as easily from
8K on the dow as it can from 9k.
we can also suggest that the traders will be ready to sell it after the first.
I also like the idea that many people are looking for an exit now that we are below the 50dma.
but as we both know... the market can always surprise.
Tax loss selling goes on all of december.
I tell you what is interesting, there was no short covering rally at the close. Almost always on friday there is one.
of chourse what are they going to do "rescue GM"?
the fight over the rest of the tarp is going to be interesting.
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