Wednesday, November 17, 2010

A turning point

Yesterday, I was thinking we might see a bounce today. It turned out to be more like a thud than a bounce, with the Dow down 16, the Nasdaq up just 6, and the S&P essentially flat. However, and you can call me an optimist, but I think the important take away here is that the bears were unable to drive the market any lower today after yesterday's big bum's rush to the downside.

Add to this the fact that the indicators are all looking oversold now (and the stochastic is about to make a bullish crossover) and I think it might be time to call the recent downtrend over. Note also that tomorrow is GM IPO day. I'm willing to bet that that by itself will have a positive effect on the market as a whole. And the futures are all up about a third of a percent at the time of this writing (7:50 PM EST).

However, according to my RTC method, we don't even have a bullish setup yet, much less a trigger. We remain way below the lower RTC line in the descending channel (though that in itself can be bullish, going by a "reversion to the mean" theory). So we're now at one of those critical junctures: the bear raid may be over, but it's not quite time to hit the "all clear" siren.

Accordingly, tomorrow I will be reaching for my long hat, though not quite putting it on just yet. And the red downtrend arrow remains in place, if only because I'm from Missouri (well, I'm not really, but I still want the market to show me) so I'll wait another day or maybe two for a bullish confirmation before calling the downtrend over. So tomorrow is looking like a good day for the adventurous to go long. Everyone else, just wait a bit.

1 AM Update

Right now, all three futures are up strongly, and have been trending up since 5 PM. ES is now up 0.83%. NQ and YM are also up about 0.75%. The daily ES chart has formed a classic bullish stochastic crossover. Based on this, I am going to have to put on my long hat for tomorrow after all, despite the lack of RTC confirmation. We'll see if I'm right or not.


Today's big trade is one I didn't make. Way back last spring, I thought it was a good idea to stock up on DRYS, the dry shipping company. Well, shortly after getting in my DRYS sank like a Liberty ship in a U-boat attack. Today, however, after the close DRYS reported better than expected 3rd quarter earnings and it took off like a V2 rocket in the after hours trade. Thus proving that sometimes you can turn a trade into an investment after all, and more importantly that it's better to be lucky than good. I ended the day up nearly 1%, mostly on the strength of that one stock.

Aside from that, my JRO was up 21 cents, and my silly OMEX spec trade was down a mickel. C'mon guys - I want some pirate gold!

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