Thursday’s Most Perfect Trend Day Ever

Mar 12, 2009: 9:07 PM CST

Granted – to be a “Perfect” Trend Day, I would have liked to have seen a strong opening gap to the upside (instead of an intial push down) but after that push completed and price broke back above the intraday EMAs, then the remaining action could be validly described as “The Most Perfect Trend Day Ever!”

Words would degrade the beauty of the sustained trend action of the day.

Price supported on every single test of the rising 20 EMA, and price formed the ideal “Railroad Tracks” pattern all the way into the close.

Once you suspect we have a trend day in force (admittedly, it took me until just before noon before I figured all the pieces had fallen into place), trading becomes simple (mechanically – but psychologically very difficult since we’re so used to being in ‘fade’ or retracement mode).

Buy any pullback to the rising 20 EMA and trail a stop beneath the rising 50 EMA.  That’s overly simplistic of course, but it works just as well if not better than complex methodologies in my opinion.  Trend Days are special occurrences where a new set of rules are needed.

Throw off oscillators and most indicators (they give false signals like false divergences and false overbought readings) and pay closer attention to moving averages (you don’t have to use the 20 and 50 – you can use your own combination) for entry and trade management signals.

I just wanted to do a quick intraday post highlighting the beauty of Thursday’s intraday price action.

Corey Rosenbloom
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  • Jeremy,

    Technically, no, if we swung back down to test the November lows from here, it would satisfy the requirement for a truncated Wave 5 so W5 doesn't have to go beneath the recent lows but obviously it would 'look' better (form) if it did.

    If the Financials get stronger, then we should expect a sustained counter-rally that may lead to something else, but we'll have plenty of time to figure out if it's the real thing or just another retracement swing up.

  • JCM,

    You're on the right page. It's important to have two or three possible Elliott Counts (alternates) to be better prepared and not get caught flat-footed.

    I'm still debating whether we're in the Major 3 or have finished it.

    I'll try to count and put up a weekend review that updates us to the two main possibilities.

  • FOREX,

    That's a good idea - those are major variables that can affect global markets.

  • Anon,

    I agree, and I didn't catch on to the structure until just before noon but was able to switch my tactics from retracement mode to trend mode, in which the strategy become buying EMA pullbacks.

    If price reversed, then it reversed and the stop was trailed beneath the 50. But if it didn't, then you wind up with a big win.

    You have to anticipate structure as best you can and then trade accordingly. If you're wrong, or if price reverses, your stop will take care of you.

  • Jeffrey,

    Good point! Combining the larger structure into play would have made for a nicer move. I was looking for a possible down-move (off yesterday's doji) early on so the initial rally caught me by surprise and then I had to shift my view mid-day. Could have participated in more of the trend day if so.

    Good call!

    No, I'm not watching your trades :)

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