THE KTS AND WHAT ONE CAN EXPECT

The characteristics are usually a small pop (not necessary) the next morning, followed by a drop to a -5/-7.

Where we gap up open, then upside becomes unsustainable and we nearly always gap fill.

Any KTS targets? Well in the old days (Bear) it could drop 60-80 handles pretty fast. Recently (in the Bull) it has been pretty useless and just been a small CIT for minimum 20 points from the high.

The KTS has had failures since March 03 if you are looking for an immediate down the next day. However when a KTS triggers it is usually always an early warning for a CIT and could be a multi day pop and drop. Ie up on DAY1 but then down on DAY2.

Since March 2003, its always been a pop and drop and gives you an ES -3 minimum. Therefore waiting until the next day can give you a better price (ie short the pop before the drop). You can get a +3,+5,+7 maybe even +10 to short the next day. This was not the case pre March 03, but has become a characteristic since.

Where it fails to sometimes give a -3 (but rarely fails to pop and drop) is when it triggers on a large downday. Those days it could rally to +3/+5,+7 and then drop back. Also when it triggers on a large downday, those days could be when we get the multiday pop and drop.

Nearly always a KTS was a CIT. However when it failed to immediately trend down on the first KTS, it was sometimes followed by another KTS after a few days and that was the immediate nail in the coffin (2nd KTS)

Problem is sometimes the drawdown was 10-20 points on the first KTS, before the next one.

Nearly always if it went up and did not give the -3 after the trigger, then next day was quite a nice down day.

Therefore I look to short for the KTS once I see a good entry the next day.

KTS5

The main difference is that KTS5 is the same trigger but on a big down day.

Hence DAY1 of KTS can be a bounce (but still have pop and drop characteristics).

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