Tuesday, July 19, 2011

Lessons From Yesterday and Bottom

"In the name of Allah, the most Gracious, most Merciful"

Yesterday's market action again validated the importance of the Trading Algorithm. It allowed me to risk a very small capital position to pick the bottom. I got out with a minor loss, and then bought again at a lower price.

In any case, Trading Algorithm will go partial long above 1315, and full long above 1325, with tight stops. Next post will deal with several possible avenues of current market action. This post will also lay the foundation of the ClariTweet event.

There are a lot of positive divergences in the market:
1- Nasdaq Futures did not make a lower low while SP500 Futures did
2- Financials made a lower low than the the June low, while markets did not make a lower low
3- Euro has bottomed
4- Broader indices are at a critical Proprietary Moving Average. If the market holds at this level, it would mean that we will experience a sharp rally from here.
4- Broader indices have declined in 3 waves:

All of this reasoning suggests that the market is near a turning point. Specially with us being inside the Turn Window. Hence, I cannot go short as there is a very high potential of a rally. Therefore, I am still optimistic and  look forward to adding to my long positions.


  1. "Trading Algorithm will go partial long above 1315, and full long above 1325"

    How do you get this two numbers?

  2. These two numbers are identified by analyzing the Market Structure in conjunction with Market Barometer. Market structure tells me where the market should stop if we are in a downtrend, and what levels demarcate the resumption of the uptrend.


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