Replies to post #11992 on Market Sense and Sentiment (MKTSS)

[bbgold]

Hi GR,
I am back from taking Tess to work. Yes, that was indeed a good LOD crossover signal when the DMI- crossed below the ADX near 10:15. The confirmation was when ADX lost strength (weakened) and the DMI+ gained strength. The markets also moved back above 7950 and held some support. Remember that the LOD type crossover can precede the actual LOD but you could have used that point as an entry and set your stop loss just slightly below the LOD. Personally I would not have bought any Calls at that time as the LOD was still uncertain. Later in the day near 12:30 when the markets retested the LOD but did not move below it might have been a better entry, again setting a stop just below the LOD. The Best entry for a Call trade would have been at the Intraday SMA crossover and the market finding support at 7775 or the breakout of 7800. Remember that if you are looking for a Call trade it is Safest to wait for the market to signal that it is Holding Support. If holding any Calls at EOD though I might be inclined to close the trade, at least partially as we are back at resistance near the 320SMA, maybe. It depends on whether you want to lock in profits or take some risk and see if the markets will move higher. You saw the LOD signal correctly IMO. You just need to be aware that the signal might not be the Actual LOD and that the Bounce could easily turn back down from the SMA resistance. Once the SMA resistance was broken and became Support then you had a Safer trade even though you lost some of the earlier movement. You would then use a move back Below the SMAs as a stop loss for the trade IMO. You are on the right track GR! :^)

[Bernard Ng]

I would consider to buy calls at that time, right at the LOD signal, not even waiting for the ADX to turn down a bit as confirmation. This will result in better price entry (due to panic selling)... when it's wrong, you will know when the support close to LOD is breaking.

Remember when INDU has a 200 points day, the HOD and LOD signal would be invalid.

From the above statement, if a gap down then sell off for 200 points in early morning then you see a LOD signal, you should buy that signal. On the other hand, if we gap down 100 points, you see the LOD signal, then the INDU support got broken. You will know that we have an invalid signal, it implies that INDU will drop 200 points. What you can do is to get more Puts because we still have 100 points to go down... or short some DIA.