ES 2009-09-23

The S&P has been a difficult market for my methodology. I look at:

  1. Stats to identify when a timeframe is overbought or oversold. The fact that a market is overbought does not mean I should go short; it means that it is a high risk long until the higher timeframe swing corrects.
  2. The material in Nature of Trends for patterns that define the end of trends and corrections.
  3. The Ray Wave to provide a road map to the swing structure. This helps identify when a change in trend or end of correction is likely.
  4. Stats to provide a price and time window when the change in (3) has a high probability of occurring.
  5. Ratio analysis to provide a price and time window when the change in (3) has a high probability of occurring.
  6. Linear cycles to augment (4) and (5)
  7. Sentiment indicators to warn of excessive optimism or pessimism.

The tools have been not only saying a buy is a high risk, the volume and price analysis have been indicating a major correction is likely – but the S&P has continued to ground up.

Last night the traditional  Market Profile gave us a Neutral Day Closing in the Bottom Quadrant topping setup and trigger. As long as the high of yesterday is not taken out, then we can expect to see a correction. The problem is I have no idea whether the correction, if it occurs, is of a 1-day, 5-day, 18-day or 13-week magnitude because I have no swing change in trend patterns on which to rely. This means that I shall stand aside until something develops.


2009-09-24-mkt-profile.jpg

FIGURE 1 Neutral Day

Leave a Reply

Your email address will not be published. Required fields are marked *