November 7, 2005: Consolidation

I was very happy today to chat w/Dave.... it's been so long, and I guess he's doing well with FL system! Back to market.. well, today was choppy and tricky especially in the morning.... market breadth was thin and mixed considering where ADD and ADDQ traded in relation to their bands...indices were above their emas so this was a warning of a choppy day... having said that, couple of nice setups were there... the market has hit a wall on the SP @1230 level which is very important.. also the 450 level on the SOX is causing some trouble... those are the 2 levels I'd be watching.. the Dow has major resistance @10650... if that's taken out I say we take out 11K.... oh chucks... no more predictions plssss..... :P

Today's observations and lessons are way coolamante hehehe... first off the morning fake on ER/AB which if one looks at will see that consolidation was above ema... a good rule is if the stop on a short is above the ema then the trade ain't hi probability... same for longs.... so on a typical short the stop should be at least @ the ema if not lower... same thing goes for longs... Another pattern which is very bullish I traced in red which I call "3 kings" and it's not H&S pattern... just check the 2003 daily pattern on the indices when they made a bottom and one should see a similar pattern... that's a bullish one... trades 1&2 didn't reach their measured move targets, but with stops one should've come out ok... it's trade 3 that made the day!!!! wow!!! Third observation is the 10-min reversal bars highlighted in red... rules (for long scalps) 1) market action is above 50ma 2) at least 3 bars making lower lows 3) reversal bar close>open preferrably at upper range of bar 4) entry 1 tick above high of reversal bar... 5) the closer the revesal bar to 50ma the better 6) exit on 3-min bar or take a few ticks (7-10)... will continue to observe and record findings...