02/02/2015 Market Outlook (Reversal of Reversal of Reversal)


The short-term low might be in, the reason is reversal of reversal of reversal: The 1/29 bar reversed the down push since 1/28, the 1/30 bar reversed the 1/29’s up bar and today’s bar reversed 1/30’s down bar. It’s rare for tomorrow to reverse today’s up bar to make a reversal of reversal of reversal of reversal, so I believe the short-term low might be in. Based on the same reason, the trading should be clear: Break above today’s bar high tomorrow is long, which may have 60% to be profitable. Double stop loss can still be used below today’s low, in case indeed a reversal of reversal of reversal of reversal, the trade automatically turns into short, which should have above 60% chances to be profitable as reversal of reversal of reversal of reversal of reversal is rarer. If you shorted breakdown after 3 touches today and unfortunately trapped, there’re 2 options, one is to stick to the original stop loss (above 1/9 high), the other is to cut loss if breaks above 1/29 high. Which way is better, I have no idea. The market is very choppy those days, so I won’t put heavy bet on either direction.

TradingBullChannel

The short QQQ 4th touch breakdown still is valid.

QQQDaily


CHINESE TRANSLATION

 

可能短期底已经过了,理由是reversal of reversal of reversal:1/29的棒棒反转了1/28开始的下跌,1/30的棒棒又反转了1/29的上涨,今天又反转了1/30的下跌。这样,明天再反转今天的上涨,来个reversal of reversal of reversal of reversal的可能性很小,因此我认为短期底已经过了。根据这个分析,操作应该很清楚了,明天高过今天的high是long,成功的可能性有60%。可以设置double stop loss在今天的low以下,真的有reversal of reversal of reversal of reversal的话,自动转为short,成功率应该会高于60%,因为reversal of reversal of reversal of reversal of reversal的可能性更小。今天short breakdown after 3 touches的,应该不幸被套了,下面有两个选择,一个是维持原计划的stop loss (above 01/9 high),另一个是high过1/29 high就止损。哪个方法好,我不知道。最近大盘上下震荡的厉害,往任何一个方向做,都不宜重仓。

TradingBullChannel

Short QQQ 4th touch breakdown继续有效。

QQQDaily

6 Comments on "02/02/2015 Market Outlook (Reversal of Reversal of Reversal)"
  1. Comment left on:
    February 2, 2015 at 10:12 pm
    Al_Dente_Here says:
    • Comment left on:
      February 3, 2015 at 12:08 pm
      UniqueAAPL says:

      Wait, yesterday was a one white soldier? I saw it as similar to a bull hammer

  2. Comment left on:
    February 2, 2015 at 11:41 pm
    racer29 says:

    Japan QE story is starting to unravel. They have been continuing the massive QE and the monetary base is decreasing now.
    This is putting a shock to the Japan bonds as yields are now going up. Glad I go out of my Japan bonds earlier last week.
    I think maybe Japan bond prices have topped as the current massive QE is losing it effect and they really cannot do much more QE as they are buying about 100% of their bonds now and with extra money going into buying stocks and commodities – some in the US markets – USD dollar buys -> US stock index futures, and US bonds.

    Looking to maybe go long Germany stocks in the near future –
    HEWG (EWG index but USD hedged so runs like $DAX index). As much as Germany complained about QE, Germany will likely be the big winner from QE. In particular German banks, bonds and some stocks. ECB QE will not succeed equally and I suspect there will become greater divergences between the strong and weak EU countries – bonds and stocks.

    If you compare the charts of HEWG and EWG you will quickly see the advantage of having am etf be USD hedged with so much currency volatility. HEWG runs in the local EURO currency and then translates to USD stock exchange. Versus EWG runs natively in USD and looses a lot if USD goes up.

    • Comment left on:
      February 3, 2015 at 7:02 am
      uempel says:

      Racer, I doubt that this is the right moment to long DAX. Market is on fire, but my indicators don’t show much bullish leeway (without a prior correction). I’m thinking about shorting 11000/11150 area.

      Why am I negative? I might have read to much Gideon Rachmann in the FT early Tuesday morning 🙂

      Google G.R. Dangerous cracks at Europe’s centre

      • Comment left on:
        February 3, 2015 at 8:33 am
        racer29 says:

        thanks much for the opinions. I am waiting but watching. agree need a pullback form this extension of DAX.

  3. Comment left on:
    February 3, 2015 at 12:14 am
    racer29 says:

    the Feb monthly main pivot is 2018. Many trading decisions are based off the key monthly pivots. So that is why they ran a spurt algo near the close to get a close just above the 2018 main feb pivot. Watch action around 2018 area to see if it holds or not.

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