Back to school. Fri Dec 4

There was a late sell off in the US after another tiny new high early on in both the Dow and the S&P500. There really is no momentum in the US which is not a good sign since their markets are the strongest around. We may still have a little more of a rally in the Xjo but it's going to be difficult to make it to a new high.
This sort of analysis is useful as background but this week's trading has shown that I shouldn't let it colour my day to day work. So far, at 11.02 am, the Xjo is down 34 points which is a recovery of 20 from the earlier low. I'm sitting on my hands and trying to see what lessons I can learn from this week so no new trades.

1.41 The market has been grinding down slowly and we're now down 64 points. I've only got a few small positions right now and I'm spending the day looking at reversals. I'm intrigued by them because they're often explosive but I think I can trade them better. It seems to me that it may be possible to weed out the low probability ones.

I've just been looking at the Karoon chart.

In late September there was a bullish reversal trade that fizzled out but in early October you had a reasonable opportunity. The same thing played out a month later on a more compressed scale. I think you could have avoided the first substandard trade by the simple expedient of waiting for a correction and a minor new low. I'm not extrapolating off the back of one chart, I have noticed this cropping up regularly. It also raises the question of what sort of profit taking stop to use since these reversals are often simple so there is no pullback and retest of the high.

4.10 We've underperformed most markets today although there's a small rally into the close. A nothing day today for me as I try to tighten up a few technical things. Overall, the Xjo falls 72 points.