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#1 After a nice drop, the CR on the next day was an
indication the market might rally, but not enough to get me to pull the
trigger. The next two days formed a Bullish Candlestick. The trade was on!
#2 The CR plus the bearish wedge has us believing the
market would drop, but with two CRs and a GR the following week all on
consecutive days, the biggest drop should have been on the day of the first
CR or the following day on which we had a GR. Both time periods saw OEX
Puts increase by +100%.
#3 The CR followed the next day by the DR again would
be considered as a single reversal because they are on consecutive days. Again, OEX Puts increase by +100%.
#4 The single CR came after a 3-day rally that failed
to get above the 500 resistance line.
We are always a little caution with only one reversal indicator, but
with the failure to break resistance, and the fact the we had already knew
that Thursday or Friday would be the big mover for the week, we had enough
confidence to go short.
Unfortunately, with Friday being expiration day, I recommended to
subscribers to buy Sep Puts. They
gained over a 100%, but the Aug Puts soared by 300%.
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