Today is Wednesday, September 30th and what a day on the Street today.

We have not had a day like this for a while, in that the price action was great. There was a real nice break just after the open and down we went. If you happened to be able to ride that wave down, you would have done great. The set up was there and down see went. It took all of about 25 minutes to drop 14 points straight down.  There was a nice tight consolidation just after the drop, usually the consolidation period would have taken longer before the next move.

The force of the drop, must have spooked a lot of traders to take on the short position, they thought it was the real thing and jumped on it. Well, it wasn’t at least not yet, in-fact it may not even come at all within this move? That is something all traders need to be aware of. Trading is not an exact science, but of probabilities and conditions.

What if statements, need to be asked all the time. What I mean by this is, “If this, then that”. If a break down or up at key pressure points takes place, then you can expect a move in that direction. The market is ruled by order placement. Order placement at key turning points. Your job is to find out where those pressure points are. An exact spot on the chart that is going to “Tip”, the movement in that direction. Once the momentum has shifted and we get to the tipping point, it usually does not take long for the price action to move out in that direction. The reason? STOPS. That is right, stops, SELL STOPS AND BUY STOPS. Those orders can be parked and act as fuel for a move in the opposite direction once hit.

As I stated earlier, usually a counter trend rally like we had today after the drop, will have run out of gas much sooner than it did. That can be a little clue that the move up may not be done yet. That is why you always have to look both ways. Seeing the case for a sell off is fine, but you have to know where the turning point is if that does not happen. With the daily close still in tack above support, I would have to be looking at a turn back up, just the same. Haven’t you always heard, “look both ways before you cross”, it still applies.

I have another daily chart up, showing a different possibility than the one I showed yesterday. With the market sentiment right in the middle of the range, there is more room for a run up before the numbers become extreme. Just an idea, we have to keep an open mind.

http://www.screencast.com/t/pfb41GqE              Next view of Daily Dow

http://www.screencast.com/t/bb0eVQDgeM     Just one trade today

Related posts:

1. Scalping the S&P 500 for Daily Profit
2. Daily Chart of S&P 500, What Do You See !
3. Daily goal met 20 minutes today
4. Daily Reversal
5. Daily chart of Dow Industrials with commentary

Tags: daily chart, Dow, market sentiment, turning points