Today is Thursday, April 29th and today we saw a nice reaction rally to Tuesdays sell off.
A pretty good day on Wall Street with the Dow up over 100 points and the S&P up about 15. Most of the movement came in the night trading and the very early opening push. After that, it looked like the market went to sleep. We did see a close right at the days high on the S&P 500 futures and that is a good thing overall.
Tonight I will see the market sentiment numbers and any changes that might have happened from last weeks push higher. If I remember it ended up at around 53% bullish which is very close to the 55% signal. That is generally an area that you will see a reversal take place. With the big sell off that we had on Tuesday, that may have influenced the poll taken at the close of Tuesdays session, but can not be sure. If the numbers backed off, that is going to be a good sign, anything below 50 I will consider good for the bulls. If the numbers increased in the face of the sell off, that would not be good.These numbers are released from Investors Intelligence, which tracks Investment Newsletter Writers opinion of the Stock Market Direction. These numbers work in the opposite way that you might think. As they consensus gets more bullish, it acts as a contrarily indication that the market is ready to go against them. Since these writers send there advise to the general public at large, you can see how the people get feed the wrong information at critical times, just before a big shift in direction of the stock market. You may be wondering why people pay for such bad advise, I can’t figure it out but only come up with, “human nature”. Wanting to believe in something which will take them to the other side to financial freedom. I will comment on this in tomorrows posting.(Just saw the numbers come in a minute ago. They are currently at 54%. which is only one percentage point away from the 55% percent historical trigger point. If we get one more good week through Tuesdays close next week, that should put it over the top and signal a potential drop. It is possible the drop can come now, but the only way to work off the high level of built up optimism is a sell off, for the most part, so be careful going forward as far as the large major trend is concerned.
Below I have a chart of the major index’s with the S&P and Dow as the main point of topic. This is a monthly chart showing that we have come back up from the sell off of last year exactly 62% on these two major index’s. That is significant in that it is a nature target area that is followed by many. The two key area’s are 50% and 62% retracements. We hit the 50% retracement mark months back and it did result in a pretty sharp little pull back, but it was only seen as a buying opportunity by many and the market pushed its way back up and then some, which brings us to the 62% retracement area. This is not enough to say that one should sell, in and of itself, but it is just an important area of interest that is being looked at by many. That is the reason we too need to look at it and see if others things will confirm to us that this may be a top or least a temporary top. In my opinion it is too soon to tell, but tomorrows sentiment numbers will shed a little light. The technician part of the equation has changed a little negative, but there have not really been any concrete shifts in the balance of power as of yet.
When looking at these area’s of interest as I have called it, it is important to remember what others are looking at and focusing on. As day traders, this is also what we need to do in the daily struggle that takes place over key area’s of support and resistance. Many times hundreds of traders are looking at the same thing, trying to out flank thousands of other traders before the move becomes apparent. The masses are rarely right and if they are, it is usually not for long. We need to be thinking contrary to the masses for a trader to be consistently successful.
Many traders feel that the market seems to know where there stop is, like it just wants to take them out and continue on its way without them. In a way that is true, in that the market lives to stop traders out of there position and leave without them. Knowing that, what are you going to do about it? Are you going to just take it, or are you going to fight back, not with force, but with strategy. We need to think but not act like the masses. You need to take the other side of the majority and you can only do that if you know what they are up to.
All of this happens at every level of the stock market. It first takes place on individual stock issues across the board and those stocks make up the index’s, which make up the Index futures market.
Below is a monthly chart of the major index’s with the retracement levels shown. Again, these are just common area’s of interest that are often times followed by turning points. The second chart is a screen shot of my T-2 trade screen showing the turning points for that time frame present.
On a different note, I have had some issues with my hosting company this last week and I know I have missed some emails messages from a few people who expressed interest in Sniper Day Trading. If you could please resend me any correspondence again, that would be appreciated. I have fixed the hosting of my website but working on restoring my email. A alternative temporary email is vinnietarantino@yahoo.com . I am sure I will get all of this resolved shorting.
Related posts:
- Major Index’s Move up Sharply, to no surprise
- Technical Analysis Video of Major Index’s
- Markets bounce off 50% Fib. retracement from 1982 low
- Continued downside in the Market Index’s
- Alert – Stock Market at Critical Levels
Tags: 50% & 62% retracements, area's of interest, balance of power, natural target area's
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