DOW on Mar 16 07, Jan 22 08 & Sep 5 08

I was looking at Dow's daily chart earlier today- and took an interest in those candles with really really tiny bodies and ultra long lower shadows.

I actually started by just staring at Sep 5th 08's hammer, and the huge bullish candle that followed -reaction to the 2 FMs' bailout.

Other similar looking candles are found on Mar 16 2007 and Jan 22 2008.

These are what the 3 have in common: 1) they were breaching or very near a key support; and 2) they became hammers after the Fed did something after market closed for the week - and for 22 Jan 08, for a public holiday on Monday as well. For both Mar 16 07 and Jan 22 2008, the NYSE had put in trading curbs to prevent the market from plunging.

Below are articles containing details on the intervention in Mar 07 and Jan 08:

http://money.cnn.com/2007/08/16/markets/markets_1200/index.htm

http://www.nytimes.com/2008/01/23/business/23stox.html?scp=126&sq=&st=nyt

Makes me wonder: why the repeated attempts at giving the market a soft-landing when each before had resulted in a plunge after the market failed to sustain a rally? Why wasn't the market given a chance to correct itself so it can grow healthily?

Agenda got in the way perhaps.

In any case, I don't want to be bothered about what's good and what's bad for the economy and the market. My focus is on doing what's right to preserve my capital.

So, whenever the market approaches a support that's not been tested, I'm going to wait for 2 closes on 2 bearish candles below the support before I put in a short entry. That's if I intend to hold a trade overnight.

But since I scalp most of the time, I'll definitely make an effort to stop reading too much into what the market and the Feds wants or plans to do. They can do whatever they want inter-day or inter-week, I'll just trade the movements within the day.

Talking about intervention, one wonders if anything's going to be done this time to prevent the market from plunging after yesterday's session (since it's now put a hole through Sep 5th's support)...or if the market's going to just bounce off support - without the Fed having to take drastic measures to rescue it - like it did on Mar 11 08 and July 15 08 (in red shaded boxes on chart above - where the lows are not hammers).

If market's unsure, we are likely to trade within a narrow range after market opens today.

Since I'm paper trading this week, I'm going to take the chance to explore something else.

ES has been a real pain so far. Whenever I meant to BUY, I'll have to SELL, and vice-versa, and then I'll find myself on the right side of the market.

It's utterly unnatural, and I would hate to have to do this on a long-term basis.

Will be checking out YM today and see if we click.