Thursday, December 11, 2008

What Can't Go Down Must Go Up

During the past four days the e-minis have been stuck in an unusually narrow (compared to recent volatility) trading range between 884 and 919.

This action invites an application of the "dog that didn't bark" principle. During the past several months every rally has been met by immediate selling after at most five or six days up. But this rally has not and the absence of sellers is being emphasized by this narrow trading range at the top of a 180 point rally from 739.

I think this means that the desperate distress selling that has dominated the market since the end of September has exhausted itself. The buyers are waiting around to see if these desperate sellers return, but I don't think they will, not at current levels at least. If I am right about this the breakout from this narrow range should be to the upside.


Anonymous said...

Part of me agrees with you; a budding pain begs to mention the compostion of traders has changed for the here and now. Hedge funds have their problems and reduced their activities and the overall volume of everything they trade. Algorithmic traders have taken up that slack and created a great deal of the daily volatility we have witnessed recently. The on going prez-elect news breifings are a another day traders twist due to a lack of market leadership. The last few days of relative narrower ranges is a prelude to a massive break out; I think back to the downside.
I respect your work, energy and are a role model to this industry.

Respectfully yours,


Kevin said...

Carl, both the McClellan Oscillator, the Bullish Percentage Index and the ISEE are all at extremely elevated levels that normally trigger massive corrections and you're saying they're going higher still? $NYMO signals come with around a 90% accuracy rate so I highly doubt that...

pimaCanyon said...

Are you taking into consideration that most of the big boys are done for the year, and the market from now till year end will be driven by small speculators?

PM said...

Hi Carl,

These are not fun times. Needless to say, I'm short again, this time at 892.00. This market is like a see saw.


Kindest regards,


Anonymous said...

Carl this thing just went down. Now what?