Jim Kramer the other day on CNBC mentioned that this year’s market resembles the market of CY05. My friend Jim analyzed the 05′ market and came across a similar pattern. A pattern which may indicate a possible pull back day tomorrow +- 2 days.
Look at the chart for 06/2005. Notice the Japanese Candles for these dates:
Now, look at the candle formation for today:
The candle formation look almost exactly the same. Also, this is the first time for awhile that the Dow has closed lower for three solid days. The bulls can’t seem to win at the close of the day. Usually, the timeframe from 2pm to 4pm (EST) is institution time. If you look at the time of sales for the mini-futures for the Dow and the S&P from 3pm to 4pm, you notice there is huge amounts of selling and less buying. Therefore, the futures have been going down.
Actually, 5/22/07 was a possible reversal date. We always look +-3 days so tomorrow is a possibility for the reversal to occur. Also, notice the yellow line which represents the price movement for 07′ so far. It is right at 100% which indicates it is major overbought.Today, our Fed also stated to the Chinese that their market is in a “bubble”. The Chinese market may react tonight. Remember last time the Chinese market went down drastically i.e. Feb 2007 and what happened in the US.
It seams like all the “signs” are in place for a reversal day to occur tomorrow. Therefore, we are going to place a trade on the Dow. Our Stop will be 13620 (today’s high of 13609+11pt buffer). The price closed at 13525. This about a 100 point Stop.
So how do we trade i.e. Futures, Index, Options, ETF, etc? This is your personal preference. If you veiw the 100 pt as a big stop then you can look at options. Option strategy depends on the “greek” value of the instrument you are going to look at.
The other options are Dow mini-futures, $indu, $djx, etc.
For EDUCATIONAL USE. Commodity Futures Trading Commission, Forex, Futures, Equity and options trading has large potential rewards, but also large potential risk and may not be suitable for everyone. You must be aware of the risks and be willing to accept them in order to invest in these markets. Do not trade with money you can not afford to lose. This is neither a solicitation nor an offer to Buy/Sell. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on this document. The past performance of any trading system or methodology is not necessarily indicative of future results. All information provide d on the Blog is for educational purpose .
