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January 8th, 1998 was a cycling day that ended with a deep selloff that
set up the 3000+ point drop the next day.
9:40 This doji, associated with substantially increased
volume over multiple time bars, resulted in this intermediate bottom.
12:45 A three tick new low 45 minutes after the previous 12:00
low indicated another excellent reversal candidate.
1:20 Twin Bollinger Band penetrations gave plenty of
warning to those willing to objectively observe price action.
2:15 This two tick new high showed us the beginning of a substantial
(800+ point) selloff
Example 3: 1-min bar chart of S&P 500 (SPH8) on January 9th, 1998.
January 9th, 1998 was the fourth largest selloff in history. The
Dow closed down 222 points and the S&P closed down 3,200 points.
On very volatile days, I pay more attention to shorter time frames -
the price patterns and volume characteristics are, to me, much more apparent.
It is critical though, to resist over-trading when tracking price on very
short-term price bars. I find it advantageous to occasionally look at
the longer term bars for the larger perspective.
1:43 This one minute doji at what is essentially a double-top,
showed us the end of this retracement.
2:00 Triple hit! A doji on increased volume, the penetration
of a Bollinger Band, and the additional rise in volume was the beginning
of this 2000+ point selloff
2:25 This fast one minute up bar immediately runs out of volume with
no follow through and just as quickly reverses for a 1300 point selloff
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