Thursday, May 06, 2010

Weekly Trends Pending







7 comments:

Anonymous said...

WOW! Was it the action of Plunge Protection Team? I could not believe my young eyes to see such huuuge swings. Is it the beginning or just the end of full collapse with help of invisible hand?
Lili

Anonymous said...

Allan,
any interpretation of what is going on?

Anonymous said...

Whew!!

What a day!!!!

Allan said...

Re: interpretation

Respect the trends.

Anonymous said...

Respect which trend? The huge sudden drop or the just as unexplainable bounce upward?

Or perhaps respect human error...

Several market watchers said they heard a major firm may have accidentally released an errant program, where a trader accidentally placed an order to sell $16 billion, instead of $16 million, worth of e-minis, the futures contracts tied to equity indexes.

And...

Traders also also noticed errant trades among exchange-traded funds, including the iShares Russell 1000 Value Index Fund, which dropped from close to $60.00 to 7.5 cents.

http://online.wsj.com/article/SB10001424052748704370704575227754131412596.html

Russell Index chart (I look forward to your prediction for it tomorrow based on this chart): http://finance.yahoo.com/q/bc?s=IWD+Basic+Chart&t=1d

The only trend here is the theory that computers and charts can predict anything, so put blind faith in them.

Allan said...

Re: which trend?

Obviously, not a subscriber. It's the trend that was identified in last Saturday's Weekend Update and that characterized two out the three Trades of the Week.

Anonymous said...

It takes alot of time and studying to learn enough of the "ABC's" about trading/investing,to achieve the basic 'education 101'.

and its essential to know the basics.

One of the basic bits of 'market awareness', in chart analysis, experts recognize,
seems to be the extreme volatile behavior youre seeing now,at the top,signaling a trend change.
its a basic sign of impending trend change.

Chart analysts will call this whole move down from the top at (s+p) 1220

First Thrust Down.

the next major move should be
a "snap back rally" or a 'pull back rally'

to recover/retrace (fibonacci) somewhere around,often right on top of,the
38%/50%/62%/75% retrace
of this move down.

(Looking at all key s/r levels ,like 1180,1200,etc would be targets especially if these price points are Also the same as those key fib areas)

From an Elliott wave counting, these two moves,the first thrust down followed by the next retrace up,would be counted as

wave 1 down,wave 2 up

OR

as wave A down and wave B up.

The difference between those two countings is the difference between a larger Down Trend,consisting of 5 waves

and a continuing Uptrend consisting of an ABC correction to a 'lesser' bottom followed by the resumption of the Uptrend.

The difference in terms of price point would be something like

an ABC correction bottoming at 1120 area
and
a 5 wave downtrend bottoming at 1020 area.

Allan's mechanical system most likely is calibrated to do all these mathmatical gyrations,and spits out the line and price points.so all he has to say is "follow the trend".

but thats the technical explanation in basic TA 101