This page last updated: March 17, 1997 @ 11:45PM
Bottom of the morning to ya........................
Happy St. Patricks day, and "bottom" of the morning to ya. Or would you rather I say top of the "afternoon" to ya? I make this statements in honor of that perverse St. Patrick's day celebrant known as Wall Street. That is exacly what happened today with a negative open that turned around after the descending trendline of resistance on the 5 minute OEX chart became support after being restested for the 4th time!
In you refer to my weekend commentary, the Prudent Trader was prepared to go short against the index based on 1 of 3 scenarios. Because the market did not rally and openned down this morning, the Prudent Trader's plan to short on a break below 776 was the only option that was viable. The retest and failure to penetrate to the upside only meant that a downside target was guarenteed over what I thought would be a day or two time frame. Because of this the Prudent Trader did not post an exit strategy in my weekend commentary. So it was really for the truly dedicated readers of this site to draw upon my March 13th. commentary for guidance. This was the only time that I projjected a downside price point below my pevious 776 price point. If you recall I stated that "I think the OEX will dip to the 758 region" ......."at about the same time that the tick of -1100 was recorded". Additionally I said that this would be "a no risk opportunity to pick up a few bucks in a countertrend rally".
Let's go to the 5 minute OEX chart to see that this is pretty much what happened.
To be exact, at about 1pm eastern, the OEX hit a low of 759.23 when the tick was about -1000. Not bad if I say so myself. And it traders used my "approach" method to exit the literal price to exit would have been 759. So sue me for the 0.23 error. for my part, the Prudent Trader got squeemish at 760.50 when the tick was -900 and it appeared that 760 would hold. In comunication with those I counsel in the "offline" world, the call to exit was made. Slavery kept me from "online" communication. It also kept me from going long for the countertrend pop because as I was unable to get a good feel on the situation.
However, going into trading tomorrow, the Trailing Indicator has shifted to a NEUTRALITY condition, This means that this Prudent Traders will most likely be sidelined. But why you ask when it appears a certain rebound will occurr? If we look at the daily OEX chart, we see that certain obstacles should be tackled first and they lie less than 10 OEX points away which is my criteria for taking a position.
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Before the OEX can even begin to contemplate OEX 788 or so, the index must first get by the 2 yellow trendlines that merge together at OEX 776. The 20 day moving average is coming in at 779 or so as a reserve resistance point. I suspect that the 776 to 779 zone is doable for tomorrow but it's anyone's guess as to what happens after that. Better safe than sorry. Take the money and run. The Trailing Indicator will be my cue to clean the car, the basement, the garage and yes the toilet bowl.
For those traders who did do long at OEX 759 or so, the Prudent thing to do is to exit at 776 for a pain free trade. Technically, if we look at the S&P500 chart, the 800 to 802 price zone looks to be a logical place to stall. Interest rates are likely to fall a bit in the near term but so is the US dollar so that makes for questionable fundamentals . The CPI to be released later this week will be pivitol as will the triple witching. I make it a practice never to trade the later part of such weeks but it does appear that the bears will once again get skinned alive so those fat cats on Wall Street can keep their babes in fur coats until the animal rights activists get their way.
Finally a few post scripts. IBM did break down, but the price movement is not being confirmed by the OBV. Also, I do not believe that the MACD will confirm lower prices. We may not see IBM at 132 for this leg down and in fact I'm revising my downside projection to the 136 level at the most. The NASDAQ at 1265 for its intraday low came close to my 1260 price projection. The MACD is not confirming the lower prices. The SOX index closed on the 50 day moving average. The correction near term appears to be over for this index. It now wants to go to the 280 level.
As I say, the probabiblity of a bounce is higher than that of lower prices. Nebvertheless, the Trailing Indicator will hold me back. It prbably wont hold many of you back. Just be careful and use your protective stops if you cannot control your addictive propensity to trade. Until tomorrow, may the GREEN be with you.
