This is a 10 day volatility chart for the Dow jones Industrials, not to be confused in any way with the VIX, it is based in the price ranges. My experience is that a low volatility reading is good to trade in either direction, most of the times I’m going to make some money with a low volatility reading but only and this is a big but, if I’m right in the market direction. After the volatility starts going up, the portion of my trading capital invested in daily trades go out of the market.
The Elliot principle definitively is the best tool for timing and market direction but I don’t obsess. That being said, I’m waiting for a reversal or big pause but only after my mechanicals signals coincide.
The Russell 2000 hit a sell signal last Friday closing below the 820.65 level, that means all my long Russell’s are going at the open next Monday, the continuous method would call for shorting the Russell but this time I’m vacillating if shorting the Russell on Monday or wait for all the indexes to coincide. A Russell close on Monday above 823.59 is a long signal again.
Technology is the largest group in the Dow with over 20% of weight; traders always say that no market movement is real if it doesn’t include technology. Every trend line is steeper than the previous one meaning a breaking of it is not necessarily a short signal only a change in the pace of trend. Anyway with a close on Monday below 740 all my techs long are gone on Tuesday open.
The DAX is 4.74% above the weekly time-span short level for next week.
And if 10 day’s momentum precedes price, here are the Dow levels you should watch next week
- ► 2013 (13)
- ▼ February (13)
- ► 2011 (29)
- ► 2010 (24)