Well, the market didn't retest the 1113 area. We did get an early afternoon three-wave correction back to the 0930 ET open. In the last half-hour, the market broke to the upside this time, but didn't go very far.
Another shortened day tomorrow, and the last trading day of the year.
Charles
Charles
Here is a situation using the VWAP Line and Fibonacci to trade a 3-wave pattern. We get a tumble on the Housing data, the market corrects to the VWAP Line, which is also near the 50% coorection level, and then the market gives us the third down wave. We missed perfect symmetry by one and a half points, but still a usually reliable trade.
Charles
Yesterday we got a range expansion, which means that today is more than likely to be a smaller range day. That also means that fading the highs and lows is more likely to result in a successful trade. This morning as the market kept testing the 1115.75 high, the $TICK was showing a slowing in upward momentum. Around 1030 ET, the market finally fell back to the 0930 ET open price.
Charles
I may start doing a 5-minute chart analysis at the end of the day. It gives a better and bigger picture of what happened.
In strong down trending markets, the NYSE Advance - Decline Line typically will go below -2000 and stay there. Yesterday, it stayed above that level. As the futures was making a lower low, the A - D Line remained above its morning low. The first up 5-minute bar on the futures at the day's low led to a nice uptrend back to the resistance line, which was the overnight low. At the resistance line, hammers and down bars signaled a short-term downtrend back to the day's low. However, the A - D Line remained in an uptrend into the close, and after the close, the futures bounced back to the upside.
Charles
The market is currently in the process of testing the morning low again.
The market did dip below the overnight low. However, the NYSE Advance - Decline Line stayed above the -2000 level, and the $TICK started showing a possible short-term momentum change to the upside. This led to a three-wave correction with the second wave lasting about 34 minutes this time.
Charles
I didn't do this, but I should have. Today was a good example of doing the 3 to 1 trade. Short on test of the overnight high with a multiple of 3 contracts position, liquidate 2 contracts when the market goes in your favor around 2 points, and then hold on to the last contract in case the market keeps going south. Place your stop on that 1 contract so that the total transaction is profitable in case that last contract gets stopped out for a small loss. Today, the market faded the overnight high, and ended up testing the overnight low.
Charles
