Tuesday, June 01, 2010

June 1st Intraday market analysis for the Dow (With Updates all day)

I have a few charts to put up this morning on the Intraday action of the Dow. As you will see from the first chart above, the "W" pattern emerged within the first half hour and the slant of the "W" was up. That would have been a good time to buy. The market opened down about 100 points and when it was down 75 points you could have analyzed the market was poised to go up significantly from there, as it did.

More to follow after the formation of the next "W" pattern.

Ok, here's the latest, from the chart above we are headed down. Follow along and look at the Bloomberg.com Intraday charts and see if you can make these predictions for the rest of the day.

More to follow!

Ok, here's the third chart above. It shows we didn't yet fulfill the 2nd "W" pattern downward to below the open. The third red line has fulfilled that new high. However, I do believe we will fulfill the 2nd Red lines downward slant before the close. going below the open. From there I have no clue whether we will close up or down.

More to follow!

Well the day played out as predicted. The Dow closed down over 112 points while being up nearly 80 points earlier. If you look at the chart above, you will see I have drawn 3 red lines and there are now 3 circles on the chart. Here's how to interpret them. Starting from left to right, the first "W" pattern with red line slanted up, was completed when the Dow increased above the bottom of the 2nd leg of the W. It rose all the way to where the number 1 is on the chart. The second red line did not come down right away as you can see and instead it formed another "W" pattern slanting up, which completed the 3rd W pattern prediction at where the number 3 is located. Then the market dropped and satisfied the criteria for the 2nd red line slanting downward when the Dow dropped below the line where the number 2 is located on the chart.

So what use is this all this stuff. Well today I sold 38.5% of my TZA Put Options at the perfect time for a 19% profit. Once you have made a decision to Sell, being able to tell the direction of the market, even within a day, can help you decide when to buy or sell for maximizing your profit on that day. Why did I decide to sell some TZA Put options today? Well, the shear magnitude of world events, which could cause the market to drop significantly, at any moment, is truly alarming. Which makes my hope that we might be able to get to Dow 10,600 a lower probability. I just didn't want to risk being on the wrong side of this market which will drop for the medium and long term trend. Stay nimble out there! Hope you either sold some on the short rally today or bought at the lows, whatever your personal inclination is in terms of market direction prognostication. :)

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