Friday, October 31, 2008

Thursday, October 30, 2008

End-of-Day 10/30/08


Morning Action - 10/30/08

I wasn't sure how much the market was going to correct, since the Advance - Decline Line is still trending upward. However, once the market traded past the overnight low, the gap was closed, and market symmetry was completed following a 62% correction.

The charts above are self explanatory. In the first chart, the typo should read "0947 ET $TICK Bearish Divergence."

Wednesday, October 29, 2008

End-of-Day 10/29/08

In the last half hour, we got an interesting divergence between the Futures and $TICK followed by a huge tunble.

The above chart shows a better view of the $TICK Moving Averages, which were weakening as the Futures was making new highs. There was simply not enough support in the equity market to justify the new highs in the futures index.


Pre FOMC Snap Shot - 10/29/08


Tuesday, October 28, 2008

End-of-Day - 10/28/08

Many Central Banks around the globe are reducing rates, and the market is probably expecting the Federal Reserve to do the same tomorrow. Shorts are moving out of the way for now. Also, the last few days of October are historically bullish.

As the futures has been testing bottoms for the last few days, the Advance / Decline Line has been making higher highs and lows each day. The coiled spring in the futures sprung to the upside.


Weakness at Double Top - Morning 10/28/08

While the Futures was making a Double Top just before 1000 ET, the $TICK was showing weakness. After the 1000 ET Economic Report, the market traded down to test yesterday's low.
The 1100 ET 50% reversal was less obvious, but the market has been making a habit lately of reversing into the European close at 1130 ET.

Monday, October 27, 2008

End-of-Day - 10/27/08


Adjusted $ITCK and Cumulative $TICK

Thought that I would show the difference between the Adjusted $TICK Two-Hour Moving Avg Indicator and the Cumulative $TICK Indicator that Dr. Steenbarger talks about in his blog.
Above is the Adjusted $TICK Two-Hour MA Code. I'm using a Simple Moving Average in the code. Dr. Steenbarger may be using the Exponential MA. For the EMA, just place an "X" before the word "Average" in the code.

Above is the Cumulative $TICK Code. Again, for the EMA, place an "X" in front of the word "Average" in the code above. The light blue line (Cyan) is the Two-Hour MA of the Cumulative $TICK.

Morning - 10/27/08

As soon as I posted the note about Howe's Limit Rule, the market shot up on talk that the ECB may reduce rates.

Trading went well this morning simply following confirming and divergent signals. The market seems to be interested in forming a two day support zone.


Below Friday's Limit Down - 10/27/08

On this fine Monday morning, the market is trading below Friday's Market Limit Down price of 855.25. Remember Howe's Limit Rule!


Brett's Two-Hour $TICK MA

Dr. Brett Steenbarger's Two-Hour Adjusted $TICK MA is discribed in his recent post titled: "Gauging Intraday Swings With NYSE TICK."

Above appears to be a close representation of his Two-Hour Adjusted $TICK MA Indicator described in his post. Instead of a 20-day average as mentioned in his post, I have the Indicator setup for a 10-day average (3900 1-Minute periods) in order to come close to duplicating the chart in his post. The TradeStation Code is below:



Adjusted $TICK and Cumulative $TICK

Saturday, October 25, 2008

I Think I Can!

From Think and Grow Rich by Napoleon Hill:

"If you think you are beaten, you are.
If you think you dare not, you don't.
If you like to win, but you think you can't,
It is almost certain you won't.

If you think you'll lose, you're lost,
For out of the world we find,
Success begins with a fellow's will -
It's all in the state of mind.

If you think you are outclassed, you are,
You've got to think high to rise,
You've got to be sure of yourself before
You can ever win a prize.

Life's battles don't always go
To the stronger or faster man,
But soon or late the man who wins
Is the man WHO THINKS HE CAN!"

From the same source:


"One of the most common causes of failure is the habit of quitting when one is overtaken by temporary defeat. Every person is guilty of this mistake at one time or another.

An uncle of R. U. Darby was caught by the "gold fever" in the gold-rush days, and went west to dig and grow rich. He had never heard that more gold has been mined from the thoughts of men than has ever been taken from the earth. He staked a claim and went to work with pick and shovel.

After weeks of labor, he was rewarded by the discovery of the shining ore. He needed machinery to bring the ore to the surface. Quietly, he covered up the mine, retraced his foot-steps to his home in Williamsburg, Maryland, and told his relatives and a few neighbors of the "strike." They got together money for the needed machinery and had it shipped. The uncle and Darby went back to work the mine.

The first car of ore was mined and shipped to a smelter. The returns proved they had one of the richest mines in Colorado! A few more cars of that ore would clear the debts. Then would come the big killing in profits.

Down went the drills! Up went the hopes of Darby and Uncle! Then something happened. The vein of gold ore disappeared! They had come to the end of the rainbow, and the pot of gold was no longer there. They drilled on, desperately trying to pick up the vein again - all to no avail.

Finally, they decided to quit.

They sold the machinery to a junk man for a few hundred dollars, and took the train back home. The junk man called in a mining engineer to look at the mine and do a little calculating. The engineer advised that the project had failed because the owners were not familiar with "fault lines." His calculations showed that the vein would be found just three feet from where the Darby's had stopped drilling! That is exactly where it was found!

The junk man took millions of dollars in ore from the mine because he knew enough to seek expert counsel before giving up."

"... Before success comes in any man's life he is sure to meet with much temporary defeat and, perhaps, some failure. When defeat overtakes a man, the easiest and most logical thing to do is to quit. That is exactly what the majority of men do.

More than five hundred of the most successful men this country has ever known told the author their greatest success came just one step beyond the point at which defeat had overtaken them. Failure is a trickster with a keen sense of irony and cunning. It takes a great delight in tripping one when success is almost within reach."


Friday, October 24, 2008

End-of-Day Data - 10/24/08


Early Morning Action - 10/24/08

The open turned out to be more optimistic than expected. The $TICK just could not go below -850, which is much higher than yesterday's low. In other words, there is more buying at today's low or less selling than at yesterday's low.

We then got a 50% correction of the overnight range.

Just before the bounce up to the 50% correction point, the $TICK started to trend upwards for a long entry. At the 50% correction, the $TICK started to trend down for a good short entry or liquidation of any longs.

At the test of the 0930 ET open, the $TICK again indicated some buying interest or liquidation of short positions, which again is giving a bounce to the upside.

Howe's Limit Rule

If you have not heard of Howe's Limit Rule, you probably will after today.

Basically, if a market touches a limit up or limit down price, there are usually high odds that the market will trade beyond that limit price within the next few days.


Thursday, October 23, 2008

End-of-Day Data - 10/23/08


Morning - 10/23/08

I found the early morning action a little confusing. I don't like "V" reversals. I prefer tests of recent lows. However, that is not what the market gave us this morning. On the first correction of the low, the market kept making higher highs after reaching the 50 - 62% correction point. This is bullish.

We then got a 50% correction of the bullish action, and then the bulls took control.

The VIX remained in bearish territory to add to the confusion. But Market Structure always rules over all other indicators.

The Staples / Discretionary Ratio also indicated bearishness, but the Advance - Decline Line was substantially more bullish than yesterday.

On the bullish 50% correction, we got a bullish divergence between the $TICK and the Futures. The market then advanced quickly after the divergence signal. After 1100 ET and into the European close, we then got a bearish $TICK divergence, and we are getting a nice correction to the down side.