Saturday, October 11, 2008

Examples Of The Weak Reversals I AM Seeing








On friday morning it felt like a classic capitulation day with a huge gap down open with spikes in VIX and Put/call ratios never seen to mankind and then the spectacular reversal higher. classic and i got very bullish and cried bottom.....then i got the reality check after reviewing the final numbers and reviewing the candle stick patterns that were printed at the close. Conclusion: Very sloppy and weak. What does that mean? Well, i like to see solid reversal candles with rock solid volume. I like to see "CONFIDENT" candle patterns that close on the highest ticks of the day with massive volume. The examples i included in this post do not show "confidence", they are 'weak' and they look very 'unitimidating". I hope i am making sense. In the past, these kind of weak candle patterns usually lead to just more selling shortly after.

8 comments:

Magik said...

I noticed the same thing. There were a few finiancials that closed somwhat stong (e.g. C, UYG) but still not at their highs. And the major indicies really have not broken any interday downtrend lines...and with rumor's of major margin call selling coming Monday I'm more worried than ever...

SkyTrader said...

this bounce attempt happened on a Friday afternoon, in markets shaking with fear-- I think most people (myself included) felt the power of the breakout but just couldn't get themselves to hold over the weekend. I wonder if it had been on a Monday or Tuesday what the close would have looked like. I'm definitely bearish long term, but it seems like there's a lot of $$$ on the side itching to catch a relief bounce before the impending crash. I wonder if any good news, maybe a reasonable earnings or # could spark something bigger next week. My guess is we rally hard but end the week around this level, setting up a test of 7,000 the week after.

Rick said...

The only stock showing relative strength to me is AAPL and it has to contend with the century mark.

Anonymous said...

Vol in UYG was unbelievable. Are some of these etf's starting to lead the common themselves?
I'm inclined to believe that was a low for the ETF.. at least for the next few weeks.

Market Monk said...

Stewie, thanks for posting your thoughts and reasons behind why you felt this was a phony rally. Once again your market insight is spot on.

Although I agree with you that Friday's rally was weak, I am reserving judgement for days to see what, if any, follow through action takes place.

My custom indicators did indeed improve but only moderately. I have a feeling it was because the rally started late in the day.

My overall market prediction which I have shared with you many times in the past is for the market to remain volital for quite some time. Nimble traders will be rewarded with all others having a hard time.

MM

Anonymous said...

thank you again for your help and info....
: )

Blue said...

Let's all be nimble then. Let the market do what the market wants to do. (sounds the Oracle talking in the Matrix huh) Don't think long, don't think short, just react to what the market is giving us. Don't have your hopes tied into any one side. We're day traders. Should we really care if the market has bottomed yet? Shouldn't we always be on the right side of the trade?

Hi, my name is Blue. It's 2008 and I'm a day trader.

Market Monk said...

lol, blue. I feel like we are in the movie "Matrix"

http://www.youtube.com/watch?v=te6qG4yn-Ps

We are all debt slaves to the elite.

That would make Stewie "The One" wouldn't it?

Red pill anyone?

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