The market conformed to a high probability trade today, albeit at it’s own pace.
We speculated in last evening’s post that the market might need to bounce, as we have pulled back 50 points or so. The overnight dead zone may have been precipitated by waiting for the 8:30 report; more than likely it needed the false breakdown to trap a few shorts. It was then a simple matter to squeeze them to retest yesterday’s RTH high.
Yesterday’s chart showed possible support at the 78.5 area, and it held today right on cue.We can never “assume” it will hold, but we can presume it will, and if we are wrong, accept the stop-out with poise because we knew it was a high-odds trade worthy of taking. Conservative traders should wait for the Angel to say “let’s try to fly.”
You could feel the lunch pulse at the 91.25 area, to test the upside, and as we approached the 60% 2 day fib, the risk/reward parameters started to change.
We had a T2 of 98.25, and it was a valid target. I follow fibs, but am not really a fanatic about them. I am more interested in the things that are NOT common knowledge.
How do I know they are not common? Simple: Not much discussion in the literature out there about some of these other theories. They are covered in our system, as is projecting possible targets for the day.
Thanks to those who have registered already, we are starting to make progress.
Angels won all day long, but you have to expect profit taking in the afternoon. Capturing your chips is part of the game. If you were flat, or wrong, as the day wears on forget about chasing. One guru shorted the 92, took stop out at 95.5, tried to buy the 95 on the pullback.
Can you say whipsaw?
We probably all have done these kinds of things,and more than once.
If we get beat on a trade, we don’t have to have an “emotional response” and try to jump in the other way and make it right back. Wait for a little clarity,and then if the timing is right, the Demon says maybe, we can give it a go.
Remember to follow your rules regarding maximum losses per day, etc.
The Demon sent the price back to test the 88 breakout, and conservative traders with multiple positions needed to start scaling out at the 91 – 92 area.
Option expiration tomorrow; hang on to your chips, and being a little more cautious is always a good idea on Friday.