2009 is not 1929 so one should not expect the same action. However, I think we get a rally after the past 3-month decline and then a massive decline to new lows. The action in 2008/2009 will be compressed over a 6-month period, not as loneg as in 1929. Things move faster these days..... ------------------------------------------------- http://norris.blogs.nytimes.com/ January 12, 2009, 6:30 pm A Year-End Rally Vanishes The last two days of 2008 saw the Dow Jones industrials gain 3.45 percent. It was, Dow Jones promptly announced, the third best end-of-year rally ever for the index. The best one, Dow added ominously, came in 1929, when the index leaped 4.22 percent over the final two sessions, rising from 240.66 to 248.48. For a while, it looked like that 1929 rally had legs. By April, the Dow was up 22 percent from its level before the final two days of trading in 1929. It was, of course, not to last. The Dow fell below 240.66 in mid-June, when the stock market plunged 7.9 percent in one day as Congress passed the Smoot-Hawley law to raise tariffs. Democrats said the voters would reject that decision, and that it would hurt consumers. Republicans said the bill would be popular. âThe American people have prospered under tariff protection,â said Senator James E. Watson of Indiana, the Republican leader. Two years later, he lost his Senate seat. After 1930, the Dow did not trade above 240 until 1951. Today, the Dow gave up all the gains it had registered in the last two days of 2008. It closed at 8,474.05, almost 10 points below its level on Dec. 29, before the rally began. In 1930, it took almost six months to reverse the year-end surge; in 2009 it took seven trading days. Since the Dow was re-engineered during World War I, there have been seven year-end rallies when the Dow gained at least 2.5 percent over the final two sessions. Here they are: 1. 1929. up 4.22 percent. Following year, down 34 percent 2. 1920, up 3.97 percent. Following year, up 12 percent 3. 2008, up 3.45 percent. Following year ? 4. 1941, up 3.16 percent. Following year, up 8 percent 5. 1917, up 3.12 percent, Following year up 11 percent 6. 1930, up 2.76 percent. Following year, down 53 percent 7. 1931, up 2.72 percent. Following year, down 23 percent Three up, three down. But the losers were a lot more memorable (average loss 37 percent) than the winners (average gain 10 percent). The primary indexes remain well above their 2008 lows, reached on Nov. 20. If those lows â 7,552 on the Dow â are taken out, there will be a lot more talk about 1930.
Today was most likely good for the "enter at the close and hold it until tommorrow 10 am" strategy, since we haven't had this kind of SDD follow up for a while, closed close to the low and 2nd gap rule acts as safety valve.... Futures at the cash close were around 868...
But you must admit that thing aren't exactly considered "normal" lately. I dunno if this is due to high expectation going into Obama inauguration or whatnot, but something just doesn't feel right (at least for me). As for KISS, you must then ask just what is a "proper" perspective? My initial feeling why most traders lack perspective in the first place is that they don't stick to what they already know but rather try to imitate (or call it emulate) others.
Proper perspective is simple. When the support/resistance level, trendline, moving average, etc. whatever is not working, look up at least one level in time frame to see if something bigger is cooking. Simple enough? When we trade, it is the money management that matter most. Thus, knowing IF something may happen at a higher time frame, you would be prepared and not married to your position.
No, it ain't that simple. I monitor 5-, 15-, 30-, and 120-minute charts, not to mention the daily. I have no qualm about the legitimacy of the "big picture", but you can't assume that higher time frame will always show you what you can't see below. Moreover, by the time the big picture presents itself on the higher time frame, you've essentially missed the larger portion of the move.
Not only that, you actually may end up buying the top and selling the bottom. This is where anticipation comes into play. Higher timeframe is used to find the "next" s/r level, but in actual trading it works in the other direction: trade the setups in the higher timeframe and find your entry in lower one.