As of 7:00 pm the futures are down 3.00 points. A lot can change between now and the morning. I bought some BGZ on the close on Friday based on indecision and the candle that formed. I was very neutral going in to Friday not able to make a call. The inability for the bulls to hold to the new highs and paint a red bar had me convinced to hold some BGZ over the weekend. If there were some geo-political news I wanted to be hedged against my longs.
This is our 10 Day High-Lows indicator that Dave Fulkerson a team member of our trading group at http://TTTHedge.com recommended I put together. I promised to send him an updated picture but decided to show everyone the current state. We publish an update on this indicator all day long in the trading room for our members. We are studying it and trying to integrate it into our trading plans along with our New 52 week high sentiment indicator.
Our 10 day H-L is calculated on the Russell 3000 to give us an indication on the overall sentiment of the broad market. It has a 10 day look-back period and calculates the number of issues that hit 10 day highs and then subtracts the number of issues that are at 10 day lows to give us a “strength or weakness” number. Numbers over 1000 have been extremely bullish days and Friday closed right there.
A negative close on a strong value does not seem to be bearish. A quick study of buying the Friday close vs. shorting showed an advantage to the long size with 89% chance of profit vs. 72% for the short.
We remain in a very bullish trend with rising 10 day highs outpacing 10 day lows and we see the same trend in the 52 week new high data. Based on those two factors this week looks set for the bulls again. OPEX has been good the last two month for the market.
The market during these bullish legs does not tend to sell off except on a news driven event. The pattern is for H-Ls to trail off while prices continue to climb to new highs as shown on the chart. I am waiting for a lower closing reading on the H-Ls before I turn short-term bearish. That might happen tomorrow morning, but if we continue to build that number to the 1000+ level during they day then the bull is still in business.
Friday’s H-L was the sixth day in a row of a higher close, hence the purple bar. That has only happened once before since the March 9th bottom and occurred on March 16th, another sign that we are still in a strong bull trend.
See you tomorrow (or today) depending on when you are reading this…
Marlin aka RedlionTrader
0 comments
Post a Comment