Dow @ New Intraday High for 7/12...

[myminitrading]

Quote from michaelscott:

Lets look at this logically and talk about this in an intelligent manner rather then resorting to anecdotes, slogans and other trivia that has nothing to do with anything ...

The vast majority of technicians do not declare a breakout to a new high until there is at least a 3% break over the old ones which would be right around 14000. The reason for this is so you dont get yourself into a bull-trap.

I look at the chart and see the $INDU as chopping around the last month and in need of a direction. This formation looks like a topping pattern that we have seen before.

Then lets look at the fundamentals. The main fundamental that gives the $INDU strength is the $XEU. If you believe the $XEU will go higher from here then the $INDU has further chance of breaking out. The $XEU is at an all-time high and appears to be at the right peak of a large cup with the previous high set somewhere in 2005 if I remember correctly.

When the $XEU does start to retreat, then this will cause a market-wide panic. There have been many foreign buyers of real estate and other such investment vehicles who bet on the dollar to decline further. Any retreat in the $XEU will cause panic selloffs in these vehicles and vibrations throughout the economy. Foreign investors have bet on the dollar declining further which may happen, but what happens when it either strengthens or undergoes intervention by the Reserve? The result is stop-losses going off in the above investment vehicles and economic chaos followed by a swift and immediate correction in all markets.

Will they, the Federal Reserve, let the Euro go to $1.74 without intervention? One of the basic duties of the Federal Reserve is to protect the dollar. They havent protected it yet, but its just a matter of time when the $XEU gets to an obscene level where there is no choice but intervention.

Now lets hear your logic...

I've never heard of that 3% rule on a breakout. A breakout is a breakout, volume is an important element on the break.

 

[Landis82]

Quote from myminitrading:

I've never heard of that 3% rule on a breakout. A breakout is a breakout, volume is an important element on the break.

There has been some talk about waiting for a 3% continuation of the move after the breakout for confirmation. However, the same publications that describe that rule also note that using 3% as a traditional rule will more than cause a lot of consternation for traders, and thus not be very effective at all. See below for a description by Chartfilter.com

Breakout Validity

"Not every move out of the price pattern constitutes a valid signal of a trend reversal, or resumption if the price is in a narrow trading range. It's helpful to establish valid criteria to minimize the possibility of misinterpreting moves such as whipsaws. A wait for a 3 percent penetration of the boundaries is traditionally necessary before determining that the breakout is valid. The resulting signals are less timely, but a considerable number of misleading moves are removed.

However, many short-term price movements barely exceed 3 percent in total. In short term trades it will be difficult to make a profit if you wait for a 3 percent move to buy, and an additional 3 percent decline for a breakdown to sell. The 3 percent rate works well for longer-term price movements where the fluctuations are much greater. Deciding whether a breakout is valid or not depends on the type of trend being monitored, volume, momentum characteristics and your own experience.

An upward surge in trading activity, or volume, confirms the validity of the breakout. A low volume breakout is suspicious and should be disregarded. Increasing volume is not as essential for a valid signal with downside breakouts, as it is for an upside breakout. Prices will often reverse and put on a small recovery, following the downside breakout. This price increase is regularly accompanied by declining volume."

http://www.chartfilter.com/reports/c32b1.htm

 

[myminitrading]

Quote from dtan1e:

i agree /w what u say the topping pattern, what i see is the price making new high but the macd is not, not sure abt the FED having a duty though

I see divergences everywhere, I made this mistake in the past and will not make it again, their is money to be made, just make it today, and worry about tomorrow, well tomorrow.

 

[S2007S]

GE earnings tomorrow should move the market again, todays move is incredible.

Seems everyone is calling for 14k, reminds me of the last drop in the market when everyone was calling for the dow to drop below 10k, never happened. Will 14k happen, Im putting a 99% chance that it will. 14k by next week, maybe as early as tomorrow.

 

[stupididiot]

Quote from S2007S:

The markets have had moves like this before where you think it can just keep going and going and going and before you know it, it ends.

What ends? The 24 hours Mr Shorty is given to meet his margin call?

 

[Ivanovich]

Quote from michaelscott:



Now lets hear your logic...

I don't need logic. All I need to do is point to the last year and say, "See?" This market is anything but logical.

The market continues to do what it wants regardless of how many postings there are about cliffs. Regardless of how many pundits call for a correction. Regardless of how many indices are diverging. Regardless of....

Well, you get it, I'm sure.

 

[Manni]

Quote from MattF:

could very well see 14K by next week now.

up, up, up we go.

Yup, it looks like its on a mission :

subprime
Inflation
poss rate rise

nothing is going to stand in its way.

ES has been smooth today wheras the AB has been a b1tch.

hold on - looks like a short setup on the AB 5 min chart

 

[Ivanovich]

Quote from Manni:


nothing is going to stand in its way.

That is the whole truth. The market is going to do what it wants regardless of what folks believe it should do.

The best thing to do is to hop aboard the train or stand aside. I have opted to stand aside at this level - it's pure madness. But one thing you won't see is me calling for a top or trying to get in the way. I'll just be road kill like everyone else calling for it.

 

[michaelscott]

So far the market has fit into logic perfectly. The retreat in 2000 was predictable, the bottom in 2002-2003 was just as predictable and then the fact that we would make it to the other side of the right peak on the SPX was just as predictable.

If you look at the SPX, every move has been very predictable and very logical.

The market doesnt do what it wants, but there is a larger picture. The SPX still hasnt set a new high since June 4th.

I feel the SPX will be pulling back in the future as value is cast aside and the NDX will move higher. SPX 1130, NDX 3000.

Quote from Ivanovich:

I don't need logic. All I need to do is point to the last year and say, "See?" This market is anything but logical.

The market continues to do what it wants regardless of how many postings there are about cliffs. Regardless of how many pundits call for a correction. Regardless of how many indices are diverging. Regardless of....

Well, you get it, I'm sure.

 

[Ivanovich]

Quote from michaelscott:

So far the market has fit into logic perfectly. The retreat in 2000 was predictable, the bottom in 2002-2003 was just as predictable and then the fact that we would make it to the other side of the right peak on the SPX was just as predictable.

If you look at the SPX, every move has been very predictable and very logical.

The market doesnt do what it wants, but there is a larger picture. The SPX still hasnt set a new high since June 4th.

I feel the SPX will be pulling back in the future as value is cast aside and the NDX will move higher. SPX 1130, NDX 3000.

Ok, then if the market is not doing what it wants, what is it doing? Is it following some puppet master?

Secondly, if today's move is logical, then what are you doing all this time calling for it to fall off a cliff, and then telling me I'm not using logic when I say it's going to continue?

Are you calling for a top here? If not, when? Clarify yourself a bit, because when I read the second post of this thread - the one that started our discussion - it sure sounded like you were looking for the market to "fall off a cliff". Wait, that's exactly what you said!