Tuesday, October 28, 2008

10.28.08 - Gain to Pain

The large gap up to yesterday's average price couldn't hold after hitting R1, putting us back just above the pivot under a declining VWAP. I didn't "want" to believe it either, but the early turn in the cumulative tick and AD lines were early tells, forcing closure of levered longs entered last night (see prior post).

Sell the rallies is getting boring (lol), even if it remains profitable. Note the large supportive volume spike just after 8:00 AM PST, but I'd keep neutral until the aforementioned indicators turn around. That was some consumer "confidence" number... don't forget that's a coincident indicator though. Lot's of mixed messages out there on the divergences front even as we head ever lower.


o Bloomberg - CDO Clearing
o AlphaTrends - New Lows Coming?
o Quant Edges - Capitulative Breadth High
o Steenbarger/Trading Coach - Ten Posts
o Shaw - Returns Since 1929

9:35AM: Narrowing range in price and vol (while VIX remains stubbornly high), be ready for breakouts.

9:50AM: Seeing that indicator turn mentioned above, now see if we can bounce up from the VWAP on the next test.

10:10AM: No test... just a pause and then break through the five-day, same effect -- though we are now about as overbought intra-day as we were oversold a few short hours ago -- meanwhile up trend continues.

10:30AM: Downtrend line from yesterday's highs to today's opening highs did indeed prove resistance.

10:40AM: Now at the intraday uptrend line. Will it hold? Overbought is burned off, but indicators are back to negative slope.

11:40AM: Indicators above still the best tells of the day -- keep watching them.

CLOSE: And back again! RSI(2) > 90 -- That doesn't have to stop a multiday advance, but recognize that it's an extreme one-day change. Fear works both ways!

Never Investment Advice

1 comment:

Anonymous said...

Hello Jeff,,,

Great day,, both sides, i'm chancing over night........