Typical pattern during summer
Typical pattern now
Friday, December 11, 2009
Delay Pattern
Lately, the market has been acting with a bit of a delay. That is, usually when a market wants to go lower, it does so in the opening 30 minutes of trade. But recently, this market has been rallying at the open and then trading in a range and then breaking down from that range. Its almost as if all the buyers want to get in as quickly as possible and don't want to wait. After they are done, the market falls due to a lack of eager buyers. The way I interpret this is bearish. The buyers are panicking, not the sellers. The opposite happened during the summer while we rallied. We would tend to sell off early in the day after gapping up, but the selloff wouldn't last more than an hour or two and we would rally for the rest of the day. The market back then was characterized by eager sellers who didn't want to wait to sell. Back then, the sellers were panicking.
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3 comments:
This is a very interesting analysis.
But if this leads us to think that the market is bearish, then how would you explain the late day rally two days ago, and possibly today ?
Okay, so the rally on Wednesday was probably due to a very strong support at about 1985.
But why is the market rallying now to 1106 ?
Do you think it's a bull trap, ready to unleash itself next week ?
Okay, maybe this isn't going to be much of a rally today,
as the market is struggling above 1105.
If it continues to struggle till the end of the day, it will in fact be very similar to the pattern you mentioned.
This is just one piece of the puzzle. I have noticed that the market is not selling off on the stronger dollar. That's a bullish sign. But overall, there are more bearish signs than bullish signs.
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