January 23, 2008 Stock Market Recap

I have to run to a meeting so I’m going to try to keep this really short. Needless to say I liked the action today much better than yesterday. The mid-day swoon gave the unsure longs a chance to get shaken out and the explosive afternoon rally certainly got some shorts to cover. I fear for the folks who just jumped into those inverse ETFs, especially if they went for the “Ultra” versions. (as an aside, my blog had record traffic yesterday thanks in part to a ton of people searching for inverse ETFs. You can see the traffic spike here if you want)

Volume was off the charts today as was volatility. The Dow had over a 600 point range today. I was IM’ming with Duru a few minutes ago and we were discussing the tweezer bottoms in the S&P and Dow as well as what I’ll call “Bollinger W Bottoms”. That gave me a sense of déjà vu and I ended up on a post of mine from a 2004 bottom. In that post I talk about tweezer patterns as well as explain what I mean by “Bollinger W Bottoms” — see points 4 and 5 in that post.

Well, I’ve got to run. Here are the charts of the indices:

Trend Table

Still no changes since the 10-day moving averages are still a good distance away.

Trend Nasdaq S&P 500 Russell 2000
Primary Down Down Down
Intermediate Down Down Down
Short-term Down Down Down

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

Comments

  1. Posted by Dr. Duru on January 24, 2008 at 12:25 am

    Why not also consider the March (and 2007) lows as potential resistance for the S&P and Nazz?

  2. Posted by docdan on January 24, 2008 at 11:00 am

    What are the rules for using T2108 in a bear market? Different from bull market rules?

  3. Posted by Michael on January 24, 2008 at 11:05 am

    I don’t know what the “official” rules are. The way I use it is that when I see T2108 under 20 I don’t want to be short. So in a bear market I’d use it as a warning to either get out or to get really aggressive with my trailing stops on shorts. Whether one wants to use T2108 as a signal to get long is up to the individual and how that fits with their overall trading strategy.

    You might find this old post useful in deciding how to use it during a bear market — http://tradermike.net/2006/06/a_look_at_t2108_during_our_great_bear_market/