If you're like me, you've experienced days when you're long and confident that the close is going to be somewhere near the high of the day.  These feelings aren't always right.  If they were, we wouldn't have to worry about mechanical analysis.  But often, these feelings are rooted in constant affirmation of your position during the day.  You're long and the market has been answering every dip with renewed pushes to new highs.

On these days, you have almost certainly not been forced to sweat probings to the underside of the daily open.  As we've been seeing in the last few postings, your position relative to that price tells you a great deal, particularly if you've held steady in that direction.  So when you're long and the market does its inevitable back and fill, you're maybe thinking “I'd do well to enter or add on here.”

Here's some corroboration of that feeling.  If you're at or past the first hour of the daily trading session and 75 percent of the day has traded higher than the open, you can buy at the daily high minus 25 percent of the daily range on a limit order.  (And, as always, vice versa for sells.)  Hold until the close.

Figure 1 shows some very heartening evidence across our array of financials.

The Biases for May 31

Hold all 3 index longs.

The bottom two rows determine the signal.  Dynamic Day One trumps everything�"you always follow it.  When it's neutral, the Monthly Perpetual provides the direction.  Click here for a more in-depth explanation of the rules.

DISCLAIMER: It should not be assumed that the methods, techniques, or indicators presented on 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 on 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 Market Beaters, a collection of interviews with renowned mechanical traders. He is currently working on a second volume. E-mail Art at artcollins@ameritech.net.