We received this email last night:
I have a question about today's Market Analysis. I have been subscribing for a while but today is first time I am not sure I understand the newsletter.
You called this a Test of Top on daily of $INDU. Do you consider today's (Tuesday) blue bar (outside bar) to be the test of top? Or did you think that we would get a green bar today and therefore called this Test of Top?
If today is the "test of top" bar, how would you setup a swing trade today? Would you do the usual swing setup: use daily chart of DIA and buy the puts when price trades at stop trigger where stop trigger price is the yesterday's low * 0.995 (Monday's yellow inside DIA bar * 0.995) with the first target of 20ema?
This is the chart that was posted to the newsletter. I re-read my analysis and I think the more appropriate description should have been as follows, with changes from the original in italics:
Here's the daily chart of the Dow Jones Industrial Average. After a two day rest, buyers are back, but the question is if they can buy it back up to the January 8 swing high. A move up here would set up a test of top on the daily chart. Given the extreme ADX readings for this symbol and timeframe, we are on alert of a lower high followed by a reversal to the downside.
In fact, if we look at today's chart, going into the close, the $INDU daily chart is now on an UPswing going into a textbook M Test of Top right here.
04.01.14 15:20 #