Thursday, March 19, 2009

Pullback Underway

The expected pullback appears to have begun today. The high in the indexes occurred yesterday one day after the Gann turn date. The next turn date is on March 27, so a one week pullback seems to be the most probably outcome. Of course, the market could consolidate sideways, it doesn't have to be a sharp correction.

The natural gas ETF UNG had a nice reversal today. It looks like it is going to follow oil up.

Just a note on 50dema crosses. I have found that although occasionally you might miss part of a trend move, it often pays to wait for a pullback after the first cross of the 50. After the pullback you can jump on if the move continues higher. This cuts out a lot of whipsaws. Normally, I look at the 12 and 26 demas ( in conjunction with the macd) to see if the 12 is crossing up the 26. If it is, then I look at the direction of the 50. Is it flat to up? If not, I pass on the trade and wait for the next opportunity. (The above is for longs, reverse for shorts.)

Hope it helps.

1 comment:

dave said...

"Just a note on 50dema crosses. ..., it often pays to wait for a pullback after the first cross of the 50. After the pullback you can jump on if the move continues higher. This cuts out a lot of whipsaws."

Yours is the first observation other than myself to notice that whipsaw which can be quite large, but it occurs AFTER or coincident with the cross. I wrote "Soon 20E X 50E"; so that whipsaw is ahead potentially and "should" come from higher prices which would drive the crossing of 20X50.

Regards,
dave
PS, Thank you for the 12/26/flat50 comments. The 50 is nearly flat.