Reposted this from Nov 3rd, 2011 with additional charts…

Posted this early this year to highlight a group of people to watch out for January turning point and now we all know it did happened. History always repeat itself, it may be different situation, but it will always repeat itself. Therefore, when you understand what had happened in the past, you will take note if similar situation repeat itself in the future.

If you take a look at 2010 January, you will notice that the high was made on Monday second full week of Jan 2010and then the entire week got weaker before starting to s-ell down on third week. If you look closely, there are several bearish candlestick reversal before it really starts to fall. Therefore, the good news is that there will be time for you to get out on your long position. Market will not fall in 1 day, market will always give you time. Question is, are you prepared to look at what the charts is telling you?

Note: As of now, Friday candle is a bearish engulfing candlestick.

My trading plan:
I really hope tonight report number will be very good and Dow will do a big rally. Then this weekend, everyone will be so bullish that all will start to think the opportunity that they missed in the first week of Jan (and all their friends are making money). They will be thinking, this time, if I missed it, I will miss the 2011 rally and with Chinese New Year Rally, this rally could be starting now. Then all will jump in on Monday and from Tuesday onwards, I will be looking out for bearish reversal candlestick especially on high volume. Time to go for the kill is on the confirmation day, 1 day later. Therefore, there will be time to exit, and time to enter. I do not have to take every trade especially if I am uncomfortable, right? We just about to complete only 5 days out of 200 trading days of the year. You mean if I miss this, I will miss out on all opportunity for this year? Next year? Forever?

Do note that i am always wrong. Market is always right. Is it possible that the scenario above will not happen? I will let the charts tell me what to do. If it does not happen, I will wait for the next setup to happen. Trading is like a lion: It will wait patiently hiding in the bush waiting for the injured animal to show up before pouncing it. Have a sniper mentality. A sniper will wait for days waiting for the enemy to show up before going for the kill.

 Additional information: What caused Dow Jones to turn down in January 2010? Below are the headline news from marketwatch.

Note: How to read the news (the date are saved date, which means it is for the previous trading day)
YYMMDD US Closing headline news. US Opening headline news.
On some heading, there are only 1 part, thus it will be
YYMMDD US CLosing headline news.

Above are what that had been posted. You will notice market will always give prior warning before anything happens. Your job is to recognize it. Below is what had happened early this year. Notice that market gave numerous warnings before it comes down, and also it “forecast” that japan will have earthquake…

If you look at the headlines, January started nicely due to good earnings report but halfway through both year turned down as China news is not that good. Just note that 2010 and 2011, US is still bullish whereas 2012 right now, US is in bear territory. Therefore, it may be different this year, but I will let the chart to decide.