Friday DJIA daily 12-Nov-2004

The market moved up more today, closing up 70 points. If we were just judging the market by the green bars (7 period Least Square Momentum indicator > 0) we would have entered the day after the first green bar and still be in the Dow long. The first green bar was on Wed. Oct. 27 and the open the next day was 9998.94. From there up to today's close, 10539 is 540 points, quite a nice call, and maybe more to come. I said the market looked positive and would have entered on Tuesday at an open of 9750, but then, based on a target explained earlier, would have exited on Thu. Nov. 11 at 10312. We would have left, so far, 225 points while watching from the sidelines. Sometimes, when there is uncertainty, you shouldn't kick yourself for missing all or part of a move, as long as when you trade you're successful. You'll drive yourself crazy otherwise.

However, this is an educational website, to educate myself and other interested traders and to determine whether the market is predictable or not.

If the consolidation of the last few days is a mid-point of the swing, the question is mid-point from what? Let's take it as a mid-point from our target of 10312, so we would project a new target of ((10400-9986)+10400) or
10814. This move still has been extended a long way and the indicators are very overbought, so if I were to enter a trade, I'd try to be conservative, maybe entering above the high of today's bar, (10565) and putting a stop to exit at today's close or 10539. I still think it likely for the market to come down and wouldn't want to be caught in a big down day. I will explore a shorter time frame of LS Momentum indicators to exit trades and let you know if that seems useful.