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    One day wonders dominated in 2008 & 1932

    October 17, 2018

October 17, 2018

One day wonders dominated in 2008 & 1932

Based on the evidence this is what I know

In the wake of the extended bull market since November 6, 2016, and more recently the advance from the April lows it will be hard to resist bullish actions the day after a 500 point rally by the Dow.

However, there are certain things I know, one of them is after a market experiences a panic low, measured by our Technical Event (TE) modeling, the best the market can do is a trading range, a change of trend from down to sideways has an extremely high confidence level.

All the major US indices experienced an S-T and in a few cases an I-T rule #1, a panic low on October 11. That condition will persist until the next TE happens.

Going into this week, I had uncovered the AOD decline potential for this time frame, and it remains. A test of the low, successful or not, continues to be expected, before more sideways action into the election.

From an EWT point of view, a break of the low is needed to confirm the big bear. That break would also put trend followers in the bearish camp with a break below the 200 days MA.

Historically the rally yesterday is one for the books. The list below shows that of the top 20 one day wonders, that ten of them occurred in 2008, an election year, a bear market year and part of the decennial cycle. But more importantly, lead to a consolidation before more decline into 2009.

On a percent gain basis, the top 20 one day wonders are dominated by the primary bear market leg from 1931 to its final low in 1932, where there are 12 of the 20 high percent up days that dominate the list.

 

 

 

With today’s focus on action, not the situation, having context before your trade is a good idea.

Source of data Wall Street Journal

Systems traders, our group, has a library of trading strategies that fit every trading style. All of our algo trading strategies have the risk and opportunity management model – Technical Event Matrix (TEM) – embedded their code. Our member investor/traders can implement a comprehensive system with no second-guessing. They have the governing model for visual control as well. Membership includes ongoing tutorials with open code; non-members locked code only with 45 days of support. Library Link Here

Great and Many Thanks,

Jack F. Cahn, CMT

A Thinking Man’s Trader Since 1989

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