This page last updated: February 10th 1997 @ 11:15PM est
The holiday is now over....get ready for the Deaner Indicator-Part 2
Good evening traders. Did everyone enjoy their "trader's day off"? The Prudent Trader DID NOT. But only because monday is the worst day to perform slavery for my entire week. To make up for it, I promise tomorrow WILL BE A FUN DAY for trading the OEX. In my weekend commentary I was serious when I said monday was a trading holiday. On the close Friday, the Trailing Indicator had signaled a condition of Neutrality and my weekend commentary discussed the strategy for Monday. However, as of the close today the markets condition has changed back to FULL SELL. So now is the time to discuss what I mean by the Deaner Indicator-Part 2.
If you have read about the Deaner Indicator you know that when fully developed the OEX sells off to it's 50 day MA within 12 trading days from the time the signal is first generated.. Monday's session was only day 3, leaving 9 more days to complete a full blown Deaner Indicator scenario. Tuesday's trading day will most probably determine if my indicator is back to its usual, pre 1995 self.
Let's view the OEX chart. You can see that he 50 day MA for the OEX is currently 740.40, which is 25 points away from monday's close of 765.16. The OEX settled just above a significant trendline on the daily chart. The 764 price point is MOST SIGNIFICANT. If it is broken by more than 3 OEX points, the Prudent Trader feels that it will be impossible for the OEX to prevent the slide down to OEX 750. Notice I said 3 point below 764 and notice I said target OEX 750 and not 740. The Prudent Trader is not a greedy trader. I will gladly sacrifice the extra 3 points below the 764 price point to ensure safety that a further downdraft will occurr. Likewise, I would exit at OEX 750 because an 11 point objective is accepatable, with more profits to come AFTER THE MONEY IS IN THE BANK from the initial break.
I suspect a bounce (of unkown magnitude) will occurr at OEX 750. The lower Bollinger Band will be lurking at the 750 price point and it's logical to assume a bounce is likely to occurr at that price point. If the OEX gets within 1 point of the 750 price point the call to exit the short position will be made to my broker.One other very important consideration is the SOX Index. This index is leading the market to the downside. It is already below it's 20 day MA. If this index reaches its lower Bollinger Band before any of my price points are hit, I will exit my short positions immediately. I estimate that price level to be around 261.50 for the SOX Index. Will you be acting just as prudently? Because we are on a Full Sell signal, abolutely NO CONTEMPLATION of a long position will be entertained until further notice.
The Prudent Trader will use a 765.5 as the price that will stop him out of any short position put on at OEX 761. The "Valley of Death", No Mans Land- call it what you will. Things can change here without notice so one cannot assume what we all are assuming tonight.. Let's have fun Tuesday but remain cool and calm if things decide to get harry after 9:50 AM eastern.
Thank you for visiting the Prudent Trader Advisory. It's been my pleasure.
