The bond complex is flashing buy signals for Wednesday. This may or may not dovetail with my impression of what is probably around the corner for the stock market.

Tuesday saw the second time this month that the Dow closed in the approximate 900 points for the day range. The fact that the two days represented the first and second biggest single-point day gains in history (dramatically eclipsing the third highest), and that this is happening in the middle of a market melt tells that it represents a buy-side panic that differs little from it's sell-everything-now downside counterpart. In other words, people are suddenly scared they may have missed the move already. They haven't, as they're likely to find out sooner rather than later. The usual function of bear market rallies is to provide more grist for the downside mill. In other words, Tuesday was an opportunity for a hostile market to trap evermore longs. The last episode was followed by an almost equal downside route the very next day. I suppose nothing is going to be quite that easy, but maybe that's part of the market's latest double-reverse-get-them-with-their-pants-down yet another time. With the Fed making their announcement, the day's market action is going to be interesting indeed.

Either-Or Biases

The first set of biases includes six biases that individually signal either long or short on a daily basis, except for the rare tie. Each bias has a +1 value for long bias, and a -1 for short. The bottom line is the sum total, which can range from -6 to 6. Positive totals are bullish; negative are bearish. For bullish signals (opposite is bearish):

1. The 2-day average is below the 5-day average.
2. The close is above the 40-day average.
3. The highest close of the last 50 days occurs before the lowest close of the last 50 days.
4. The day's trading range is smaller than the 10-day average range and the day's close is higher than the previous day's close OR the day's range is larger than the 10-day average range and the close is lower than the previous day's close.
5. The close is above the midpoint of the average 15-day range. (The 15-day high average plus the 15-day low average divided by 2.)
6. Fade the majority direction of the last three open-to-closes.



Infrequent Biases

The five infrequent biases are listed below. For bullish signals (opposite is bearish):

1. Four successively higher closes were followed by yesterday's down close. Today's action was irrelevant.
2. Five successively lower closes were followed by today's up close.
3. CUP trade. For the last three trading days, the middle day had both the lowest low and the lowest close. In addition, the low on the middle day must also be lower than the lows from the previous three trading days before the middle day. (CAP is the reverse and bearish.)
4. The highest low minus the lowest low of the last three days is less than or equal to 20% of the highest high minus the lowest low of the last three days.
5. For the previous two days, the market closed lower than it opened.



Calendar Biases

The calendar biases in the indexes are listed below.



DISCLAIMER: It should not be assumed that the methods, techniques, or indicators presented in this column will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented in this column are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The author, Tiger Shark Publishing LLC, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.

Art Collins is the author of Beating the Financial Futures Market: Combining Small Biases into Powerful Money Making Strategies. E-mail him at art@traderinsight.com.