Sunday, November 10, 2013

Foot in the mouth

The rate at which a person can mature is directly proportional to the embarrassment he can tolerate.
Douglas Engelbart 

Okay so I forgot about the 20 day moving average (dma) on Thursday before Friday's big reversal.  Reversals like we saw on Friday are rare.   I've also found that at market highs there also bearish in nature.  The SPX daily candlestick chart below highlights what I missed on Thursday which is the 20dma acting at support on the downturn.  I'll be honest I thought Thursday's close was bearish enough to be the start of something bigger and it still might be but the point is that if you were short you could of used the 20dma as your line in the sand to cover shorts if we bounced.  Again I'll admit I was taken back my the massive bullish reversal on Friday and anyone that said they saw that coming is simply BSing.
So where is our line in the sand?  Looking at the SPX 15min PnF chart you can see that 1765.3 resulted in a significant move down when it was broken as support.   More importantly is the amount volume being transacted in and around that price level (1765-1762).  For now it is support.  However, if we continue to see more of these big swing days it would indicate to me that the big players are getting ready for another big move which if I had to 'guess' would be to the downside. We all know that guessing is just that guessing and we don't put our hard earned money in the market on guesses and hunches.  So we wait for a decent setup only after the market shows its hand.

Thanks for reading.

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