Monday, September 9, 2013

09/09/13: Tomorrow's opening half hour is very important

There are two items I am watching heading into tomorrow's kiddie hour
1.   Hourly OBV trend (circled in pink)
2.   233 hour moving average

Why these two?  Today's move had us closing right at the edge of the OBV downtrend.  Price meanwhile broke it's downtrend AND also closed above its 200 hour moving average.  Does this mean that the bears are toast and the bulls have it all?

It is hard to say until all evidence unequivocally points to one direction.  Right now, the bulls have price in its favor but volume has not supported the break yet.

Why I say the kiddie hour is going to be important is because if we close the kiddie hour with a strong move up then it is off to the races because OBV would break its downtrend.  If, however, either of the following happens, then we have a possible failure and the resumption of the downtrend:

1.  Pop and drop: maybe some data point is bullish or someone says something which causes markets to pop at the open.  If bears don't beat it down then this wave up may in fact be bullish.

2.  Gap down: I would totally prefer this since it leaves no doubt on the table that new lows will be visited.

The second item I listed is the 233 hour moving average.  Why do I use the 233 hour moving average?  First of all, 200 MA is widely used by novices and is the default setting for many software.  To get somewhere in this game, you gotta take some chances at looking at other angles.  You may do your due diligence on this but you'll notice the 233 MA is very good at tough resistance or support.

You may notice if you have the 200 MA set, we closed above that on an hourly basis.  This would tell a lot of people to be bullish but look at the 233 MA!  SPX failed to close above.  It tried once and got beaten down and it tried again in the final hour.

Therefore, these two are very important going into tomorrow's open.  Good luck.

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