Walk through a critical day

Below are a number of examples showing critical days as they occur.  The charts below shows a single period as it unfolds.  We provide the critical day to members on average 3 days in advance.  This allows traders to have forewarning that a reversal of the short segment in major U.S. indices may be near.  Follow along on the charts below, showing the S&P500 Index in the December 1999 to January 2000 period.  Also note that critical day research has been successful in any type of market environment and for a number of major U.S. indices and markets, including bonds and the U.S. dollar.

            Example 1 -  S&P500 Index

As the critical day on December 31/99 approaches the trend is heading higher into the critical day.  Members are aware that a critical day means that the short segment leading into the critical day indicates a bias for a price reversal to occur coming away from the critical day.  Members also know that Dec 31/99 is a critical day as the decade draws to a close.

A short term trend line drawn on the chart in blue helps to identify possible reversal points for the longer term trend.  When a critical day corresponds with a trendline penetration it can often lead to a stronger reversal of the price trend.

The second graph shows the trend leading into the critical day is up.  The expectation is a reversal of that trend meaning that markets are expected to fall coming away from the critical day.  Members are given the next critical day at this point and are told that Jan 5/00 is also a critical day.  Although markets are rising there is some concern about year 2000 problems with computer systems and some sectors are experiencing selling such as insurance companies that may be impacted due to claims of lost business if problems do occur with computers.

The critical day on Dec31/99 was a success with markets falling coming away from the critical day.  Notice the trend line penetration gave further indication that prices would fall on Jan 4/00.  The next critical day on Jan 5/00 shows that prices are falling heading into the critical day.  Two things can happen if the critical day is a success, either the price trend will reverse and head higher after Jan 5/00 or prices will consolidate and stop falling.  Also, members are told of the next critical day on Jan 7/00.  The critical day on Jan 7/00 corresponds with the release of the unemployment numbers that morning and are expected to be a possible catalyst for a trend change for price.

Two things are apparent heading into Jan 7/00 critical day.  The first is that the short segment of prices is heading higher as evidenced by the two rising bars on Jan 5/00 and Jan 6/00.  Also there is still in place a strong down trend that has not really been broken by price action. The employment report coming out on the morning of Jan 7/00 we told members would probably set the tone for the next leg of the price action given that the Y2K problems that were feared never really materialized.  The market reaction to the employment data released prior to market open on the 7th was bullish and so members should have been expecting a reversal of the larger down trend still in place on the markets.

Example 2

A closer view of the most recent signals.  You can see the short trend immediately prior to a successful critical day, reverses coming away from the critical day.  Often a failed critical day will indicate a stronger bias in the market for continuation of the trend that was in place prior to the critical day.  A failed signal can therefore provide as much information and opportunity as a successful one.  Take a look at tech studies to develop a sense of trend reversals and use.