Friday, December 12, 2008

12.12.08 - Market Loves a Good Rescue


I have electricians buzzing around me so ye old Tradestation is down and I'm on the laptop. Considering Asia was down some 7% at one point overnight, the recovery is more than welcome from the bulls. There was some hint that we may see this just before the open as the SPX had come off its high-820 lows, stabilized at 840, then jumped over 15 points in just minutes on the initial news leak. Personally, I think we were set up for this one my friends -- pure political scripting. Before I switched over to the laptop, internals looked very strong with broad participation. I think we should hold onto this run well beyond the day.

11:35AM PST - Chart updated. Cumulative tick has weakened and we couldn't quite get enough thrust to break the declining 5-day moving average. While the rising VWAP is providing support thus far, I would be concerned if it breaks. Also, note the lack of serious VIX reaction today (56). Bullish falling wedge going into the final hour?

11:50AM PST - Bullish falling wedge going into the final hour? (Posted on twitter just before the actual breakout.) Update - Volume is quiet to average.

12:35PM PST - Pivot needs to hold into the final half hour here (SPY $84.40). Couldn't quite break the five-day. Signals have flattened out -- anything goes into the close, but I certainly don't expect a repeat of yesterday ahead of some formalized auto-deal announcement over the weekend.

Reading: Dr. Steenbarger turned me on to trading with the Tick years ago, here is an excellent post with embedded links on the subject. I add the AD line on my charts. When the two are aligned, I've found a trend-scalp edge.

Close: Saved by the bell for once... how is that. Very bullish day indeed. All sorts of important support held in the face of very bad news and a strong excuse to take it down in what remains a vicious bear market.

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