Thursday, November 11, 2010

Uptrend broken

Today's Dow action both opened and closed decisively below the lower RTC line of the uptrend going all the way back to the end of August for a 74 point loss. Accordingly, I have to call the uptrend over. I am now removing my long hat and putting on my short hat. It took three days of declines to call it, but that is the nature of the RTC. The lower line accounts for 95% of the price variance in the trend. Below that, it becomes fairly suggestive that any prices in that area are not part of the trend.

Interestingly, traditional candlestick theory would have called this top earlier, with a hanging man on the 5th and a red candle on Monday. A stochastic crossover also occured on Monday. By that technique, we could have turned around to a short position on Tuesday. In that sense, the RTC is slower to respond, but I think at this point we're in for a few more days of declines. Will November live up to its historical reputation as a good month on the Dow? We'll see. Obama's blundering around in Korea certainly isn't helping matters.


I may live to regret it, but I bought 100 shares of TIE just before the close at 18.85. The big runup in DRYS today helped me out and led to an above average return on the day for me, despite the overall decline in the market. My YTD return right now is 26.03%, on track for a 37.6% annual return.

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