Tuesday, January 17, 2006

3 Gap play

As posted on 1/12, if the market closes in red on 1/13, my daily momentum would kick into sell. So as of 1/13 my daily momentum has been on a sell and continues to be in that mode as of today's close. But remember the daily trend is still solidly up. When this happens typically the market comes down and tests the rising EMAs (34 or 55).

Intel report has caused a selloff after hours, which means there will be a gap down on all indices tommorow morning. The troubling part for the shorts at this point is, we have a 3 gap play on YM and ES, i.e three unfilled gaps on 1/12, 1/17 and 1/18 (unless we fill today AH selloff in the overnight session). When there is a third gap down, typically the market goes into a climactic selloff and reverses swiftly. So i am looking for some kind of bullish reversal in tommorow morning's session

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