If it looks like a duck…
Although today was ambiguous at the open, our bias was to look for the TSS play after today’s gap was filled. Nimble traders went long after the early dust settled, and played the high odds trade. Patient players loaded up their sleigh with longs after it bounced into no-man’s land, and took the downhill slalom.
If you are willing to take your life in your hands by going out on the highway, you know that patience is a commodity in short supply with little demand.
Highs are relative, as are lows.
The mind sees patterns, but what is it we are really seeing ?
The gap was filled fairly early, and a few gurus were encouraging late longs to take the bait and stay with the trade for the retest of yesterday’s high and then some.
There were a few clues that we had more work to do on the downside, but the rubber band being stretched a little too far was the biggest one. Markets have a way of self-correcting, and although anything is possible, when price moves too far too fast, odds favor consolidation in price and time.
Today we got both.
A seasonal rally may be upon us, but common sense and observation over the years suggest that markets advance and then retreat.
Talking heads have made a big deal about the 20% bounce since November 20th. Interesting, but how about the 100 points + since last week?
Sideways consolidation is always an option, as price works off it’s over sold or over bought condition.
We need to feel the rhythm, the pulse of the market, and trade accordingly.
Most importantly, we need to develop a system that allows us to “see” the duality of the market. Ducking when the market moves against us, and taking profits when we pull a rabbit out of the hat.