» Late, Late Rally Thought: White Tuesday Doesn’t Count

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Late, Late Rally Thought: White Tuesday Doesn’t Count

by Danny on March 4th, 2008 at 1:43:53 pm

The commenter CubsRock made a great point in a prior post of mine, and he reminded me to address it. So “thanks” to Cubs for the reminder.

“One thing to remember, those Jan lows were due to Pre Market selling. This could have been bottom with rate cuts on the way. Take a look at 2 yr daily DOW chart and draw a line at 12000 :)” - CubsRock

I added the emphasis.

Jan 22 was an anomaly IMO and SHOULD NOT BE CONSIDERED in TA. Does anyone else agree or disagree and why?

I would love to hear some other opinions on this.

Why? Because it was the result of a forced liquidation by the Rogue Trader. We immediately corrected. So, if you remove this data from the indicies, here’s what you look at.

There you have it. Strong support at 12,000.

Another piece of the puzzle.

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8 Responses to “Late, Late Rally Thought: White Tuesday Doesn’t Count”

Gunners Says:

so what you’re saying is that all this “retesting the lows” talk should be based on 12,000, not 11,634? so therefore we have been retesting the lows?
March 4th, 2008 at 1:52:14 pm +0
Danny Says:

yes.
March 4th, 2008 at 1:53:40 pm +0
DPeezy Says:

It depends.

My general view is to look at closing prices for long term, >6 month, trends/supports. So in that sense, the 12k, as CubsRock points out, is a very strong support level.

But for short term, <3 month, trends, I tend to take intraday highs/lows int account.

It’s a grey area between 3-6 months.

The January 22nd fake-crash cannot just be discounted however. Rouge Trader or no, we had a huge rate cut, which has to be reflected somehow, someway in the charts. It doesn’t provide strong support, but it’s support, nonetheless.

So…my view is, if we close (significantly, that is more than 30 points) below 12k, you better hold on to your hats, cause we’re going down. Fast. 11634 will not stop that train.
March 4th, 2008 at 2:26:58 pm +0
Danny Says:

I tend to agree, but with a pause at the January lows, before an ascent lower.

12000 is going to be a major sentiment change, that is for sure.
March 4th, 2008 at 2:32:59 pm +0
CubsRock Says:

If you go back 10 years, then the Jan. Black Tuesday lows violated the 2000 highs. Where’s Wood at, curious on his thoughts.

Besides technical analysis, we have the contrarian theory and rate cuts/stimulus on the way. We are forward looking right?
March 4th, 2008 at 3:00:45 pm +0
DPeezy Says:

For a period that long, you definitely have to look at closing prices, IMO, in which case I don’t see any violation…

DJIA peaked on Jan14, 2000, closing at 11,722.98.

But then again, we are essentially discussing semantics…what’s a couple hundred points, when could easily lose a couple thousand if we break this support?

Also, I don’t think this rate cut is ‘the one’ to stop the downtrend just yet. We’ve got to have a few more, get down to at least 2%.
March 4th, 2008 at 3:18:26 pm +0
CubsRock Says:

Anyone big on candlesticks? I just noticed the Hammer today printed.
If only The Fly was here with his time machine.
March 4th, 2008 at 3:37:38 pm +0
Woodshedder Says:

I’m here.

The hammer today was pretty if you’re a bull. Volume was good. RSI(2) being oversold meant we were sure to see some strength.

However, it was printed on Gasparino rumors, CSCO and AMZN bullshit.

Nothing has changed. Market is a tad oversold. I noted Sunday night the momo would wear off, we’d see some stabilization, and then the jobs report.

The NFP report will sink this fucker well below 12K if it is negative.
March 4th, 2008 at 7:34:31 pm +0