This chart last updated: February 3, 1997 @ 11:00PM and again on February 4th @ 9:00AM (see white below)
CAN WE TALK ?..................in the vain of Joan Rivers on The Tonight Show
But seriously folks the time has come to be on full alert! As of the close today the TRAILING INDICATOR has shifted to a condition of NEUTRALITY. We all know what that means. By discipline, all long positions should be exited as best you know how. Sorry all you call buyers but I warned you for the past two posts. NEVER TRY TO ANTICIPATE the Trailing Indicator because you may end up getting your butt kicked! If you went long intraday on Friday (and again it was against my advice) before the signal was generated based on the closing data, you are now twisting in the wind and perhaps that tightness you feel is the noose around your neck. Time will tell. Even if you waited for Friday's closing data and went long today (again it was against my advice) the danger level is extremely high! It may work out, but puting yourself in harm's way is NEVER PRUDENT!
As mentioned previously, and in no uncertain terms, WE ARE ON DEANER INDICATOR WATCH. If you don't know what my namesake indicator is, please review it pronto! The possibility of the Deaner Indicator triggering forced me to ignore the Trailing Indicator Full Buy condition on Friday because the Deaner Indicator is a more powerful indicator. Although it hasn't happened yet, it's potential must be repsected.
(To myself: OK Deaner, now calm down. Take a deep breath................................Ahhhhhhhh.......That felt good)
So lets review the OEX daily chart. You will notice 2 parallel trenlines drawn tonight. Don't ask me why I didn't put them up sooner. Anyway, they point to the significance of the intraday top on Friday. Get ready for another Deaner Pearl: once a trendline that acts as support is broken it most often becomes a trendline of resistance.You will notice that not only on the OEX chart but also on the SPX chart that the same trendline has proved to be resistance so far. We may still venture upwards in an attempt to retest it again but in no way would the Prudent Trader consider that an option to pursue. Why? Lets take a look at the Philadelphia Semicondcutor Index (SOX). As mentioned this past weekend this index is the lead index to follow. By the Prudent Trader's calculations, this index is the omen that the Deaner Indicator is going to trigger. Technically this index deteriorated today and is ever so close to going down. Infact, base on this chart and this chart alone I have developed a scenario that is likely to unfold over the next two days. Meanwhile back at the ranch the MACD indicator is showing non conformation of this up move for multiple time frames.
I don't like going out on a limb, but this is my vision. Lately, (by that I mean the past 2 times the Deaner Indicator has triggered) 4 out of the 5 criteria that I use to calculate became evident BEFORE things unfolded and the 5th happened within 8 trading hours AFTER the downdraft. So if recent history is to repeat itself, the Deaner Indicator is now sceduled to be signalled by the close of trading Wednesday. This means that by tomorrow afternoon things may begin to unfold. This does not mean that the prudent thing to do is go short early. Contrere my fellow traders. I will reiterate. Do not go short unless the 767 price point is broken AND the index closes below 767 (preferabbly by a point or 2). Now let's talk about that. The Prudent Trader would love to see the sell off begin at around 3pm eastern Tuesday. If we were to dip below my 767 target late in the day it would be better to predict a close below this price point. If I determine that a close is in the cards, I might go short with a March 765 or 770 put purchase. My initial downside objective (subject to daily change) will be OEX 758. That means I exit there for a quick profit and no pain. One I'm short, I will take any retracement back above the 780 price point as must exit signal.
On the other hand, the market being perverse as it is, may attempt a rally tomorrow . All that would do is cause me to sit back and relax because of the Neutrality condition we are presently in. Barring a substantial move beyond 780, I would still remain biased to the downside and assume that this time all 5 criteria would be satisfied prior to the Deaner Indicator triggering.
Trader's best get their rest tonight. I will be around all day tomorrow and any action taken will be posted in the Blue/Red alert section of my page immediately after I get off the phone with my broker. Best of luck traders
