Counting Method To Determine A Market Bottom Satisfied On Day Five

Oil prices dropped. The Fed Beige Book said growth is happening despite the hurricanes. The earnings season has an overall positive theme. We satisfied the 'counting method to determine a market bottom'. Can we believe it? Look for follow through when opening long trades. Click here to get today's free options advice; have A.J. explain option trading to you in everyday language.

Hey trading team,

This is A.J. on Wednesday, October 19th with your Trading Trainer web log. We are your home of market insights for the serious options trader. This web log will cover the events in the market from today as well as prepare you for watching the market tomorrow.

The counting method to determine a market bottom was satisfied today. It started out that the bearish sentiment that won out yesterday, for the most part, had the market opening lower. Early on, the market went even lower. But then, news started to roll on in.

First it was the oil stock piles. With the demand dropping on the high retail prices of petroleum that consumer are seeing, coupled with the supply that’s being imported as well as that’s coming back online from our crippled infrastructure – we’ve got a surplus forming quickly. So oil prices are dropping.

Second, it was the Fed Beige book notes that were released in the afternoon. Basically the jist of those notes was that the economy is strong and that the hurricanes had little lasting effect. Also, they addressed high energy prices and inflation and how it is flowing through to retail customers and how they would contain it with possibly more aggressive rate hikes.

Third, the earnings season, for the most part so far, has been positive.

The market bulls came out on the news. When I say we satisfied the counting method to determine a market bottom, I am saying that it is day five in our series and we got a price increase of over 1% on all the indexes we look at as well as heavy volume. This is very strong confirmation that the down trend is over. Like 9 or more out of 10 accuracy. I’ve upped the trading bias to neutral bullish on this news and we’ll be looking for our other indicators to come in line as the days roll on.

My Techne January 55 Call closed flat at $3.50 per option. I’m 42% into my initial investment after 15 days.

Here are my recommendations team; today was pretty monumental for the bulls. Pretty monumental indeed. But, we know from yesterday that the bears are out there. So, we need to be prepared for the market to catch up with today. I can see that tomorrow and Friday that we may have a stall. I expect that. Actually, Friday more than tomorrow. Tomorrow, we’ll still be so excited from today.

Anyway, knowing the bears still exist, we need to tread lightly.

At this point, we do need to exit our short trades and fast. But, even more we need to really look for follow though before going long. We have so many securities setting up, we need to pick the best of the best.

Now is not the time to get caught up in the frenzy. Practice control and follow our rules for follow through. Only open a trade if the stock and the broad market are going your way. Look for a lack of news and a lack of insider trading. And, be cautious of earnings reporting. That could send you flying or dying.

Okay, team. I'm done.

Till tomorrow, happy market watching, trading and money making. Trading
Trainer is here helping you create your dream lifestyle.

Best regards always,
A.J.

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