Wednesday Wrap Up

Boy, I wasn’t kidding when picking my previous title – talking about a whipsaw day!

Okay, I’m not going to sugarcoat it – as suspected the Primary Zero was pretty much useless today and got whipsawed to pieces. The action was all in the Zero Lite, which was pretty clear right from the get-go as we saw wild swings which continued all through the day. The starting point of the slide was the ‘McDonald’s’ signal we got, which everyone cracked up about 🙂 After that we saw one more head fake, which almost got me, but then the tape started painting a large channel to the downside. Take note of all the directional changes and the sentiment swings, which were pretty wild but the Lite got us in/out nicely as you can see from the abrupt signal changes – it almost looks like the sharp edge of my hunting knife.

As we touched one major RL I knew it was time to take profits – I was also expecting wave {b} ahead of us. Once we breached the top side of the channel (marked in red on the Zero Lite) it was clear that there would be a late day rally. I actually added puts right at the top around 1:10pm EDT (the Spiders trade until 1:15pm).

Great day – I give the Primary Zero a D for the day and the Zero Lite a straight A. The question of course is how do we know which side to look at. Well, I do look out for divergences in the Primary vs. the Lite. It seems that on non-trend days the Lite disagrees with the Primary most often and most vividly. If both point in the right direction most of the time during your trading day then the trend as shown by the Primary Zero is likely to be valid. This might sound a bit more complex than it actually is and maybe it’s also context specific. That early morning rally was a great sell-the-news example and I suspected we wouldn’t bust much higher than 835 (see my prior entry). In addition with the Zero Lite stubbornly pointing downward I decided to politely disagree with the Primary and stick with the Lite today.

I’d be curious to get some input from subscribers on how you fared today. Some people seem to have done great, but there’s always a silent majority which I’d like to hear from.

Cheers,

Mole