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Saturday, November 22, 2008

Friday's action - 112108

The market staged a late-day rally to close back in the previous range...and above 8,000.

Below is the updated chart from my "Tracking the Dow chart" series. Note that the bottom black line is the 1.382% Fibonacci extension of the mid-September highs to the 101008 low. The black line above that (second from the bottom) is the 101008 low, and the black line above that (third from the bottom) is the 50% retracement.

The three white lines from top to bottom are 10,000, 9,000, and 8,000.

Regardless of the late-day rally, the fact that we broke the 101008 low is a bearish sign. Read more about possible scenarios in my past posts.



I noticed Trader Jamie traded ABX on Friday. I missed it, but did get a nice entry on another gold stock - GG.

GG gapped above the previous day's high, broke the OR high, and pulled back to form a hammer candle at that level. I entered on a break of that bar's high (as noted by the black arrow) and sold half the position at the Fibonacci extension. I held the rest of the position until the end of the day, and caught a nice move above the FE.




Next week will be short with the Thanksgiving holiday. I also have a family member having planned surgery, so I don't know how frequently I will be posting. I am working on some [hopefully good and informative] posts and will try to get them up before December 1st; check back for the following:

1.) How I use Moving Averages
2.) Tips for putting together your trading methodology (or "system")
3.) A guest post from David at "The T.A.D. Principle" on setting goals for 2009

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4 comments:

Z said...

Hi X,

How are you certain that the price won't reverse once you entered on the hammer? I remember you saying its important to examine the price action before jumping in on a hammer, and I just couldn't tell that the bars preceding the hammer offered some kind of confimration. Perhaps I'm not seeing what you saw?

On a side note, looking forward to ur future posts!

Trader-X said...

Z - here is what I saw:

Two of the first three bars were strong green (up) bars. Price broke the OR high of the first bar, and even though the fourth and fifth bars were weak they did not close back below that level. The hammer also formed at that level, signaling to me that resistance was now solid support.

Hope that helps.

Anonymous said...

Nice trade X. I am also looking forward to the upcoming posts. Anxious to read what David writes too, as I enjoyed his book.

RJ

Tom said...

Happy Thanksgiving to you and your family X. I hope all goes well with the surgery.