Wednesday, May 15, 2013
Wed 5/15/2013. Mid-day Update.
The stop on the System long position is being moved up to 1646.67 which is current 4hr support. The Score is a half-point more bullish today but, unfortunately for bears, the last 2 days of rally have not pushed most technicals anywhere near overbought and they in fact remain somewhat neutral to oversold. Under these conditions, just about every 1% drop will be bought. Bulls will probably be lucky to get a backtest of the 1635 breakout unless technicals change. Be forever vigilant. Good fortune.
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When you say technicals are "somewhat neutral to oversold", i beleive that you are referring to your system's technicals and not the conventional ones which are at historical overbought levels ?
ReplyDeleteIt is interesting to see that your system is mimicking and capturing the current euphoria.
Using a contrarian approach, this euphoric behaviour where "every 1% will be bought", or there isn't any anticipated scenario that will make this market fall, may in fact signal that a major top is imminent.
I use a mixture of daily and hourly technicals and they tend to cycle high and low every 1-2 weeks at varying rates and degrees. The System catches trends, not really euphoria, although sentiment is considered in the technicals to some degree. The accuracy of projecting likely Score reactions to rallies/drops a few hours out is pretty high but it goes to 0 after about 3 days. So, anything I say about technical setups typically expires in 1-2 days. That means you cannot read major tops into the System, but I have had luck with my discretionary spending indicator.
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