3 Reasons To Expect A Bounce In This Market

Stock index
futures opened Tuesday’s session under pressure after U.S. Consumer prices
at the fastest pace in 3 months, mainly due to gas prices, and put back into
focus the worries of some of the Fed policy makers that “inflation might be in
the process of stepping up." After a boring first hour that was plagued by a
contracting range and the absence of John Snow stating that inflation was a
myth, the sellers went for the jugular for a test of Monday’s lows.  Another
sideways drift formed bullish Gartley patterns off of the day’s low, but the
failure of the patterns to reverse attracted the sharks again.  News that Joe
Battipaglia had called the day’s action a healthy pullback and a "wonderful"
buying opportunity gave the last hour that sickly "throw in the towel" feeling.

September SP 500 futures finished Tuesday’s session with a loss of -16.25
points, while the Dow futures showed a little bit better resilience with a loss
of -126 points.  On a weekly basis, both contracts are resting on their
wedge/triangle trend lines.  Looking at the daily charts, the ES and YM both
broke the lower end of the past month’s range, with the ES landing on its 50-day
MA and the YM testing its 200-day MA. For you daily 3-Line Break followers, the
ES remains short with a Break Price of 1247.00, while the YM remains short with
a new Break Price of 10627.


morning at 8:30 ET gives us the July PPI numbers, with expectations for a
recovery from June with a 0.5% increase and a 0.1% increase for the core index. 
However, the main focus will shift quickly to the weekly energy numbers that
will be released at 10:30 ET.  With the VIX extension and high closing Put/Call
ratio, as well as the support indicated above, a dead cat bounce off of these
levels wouldn’t surprise me.

Comparing Yourself To

There’s an
old saying that "if you want to compare your own trading against the best, you
need to play the same game they are playing by the same rules."  I share this
sentiment but I’m also wary of it. It’s all well and good to take on a challenge
for personal fulfillment, but if the challenge becomes an obsession, the element
of personal fulfillment can, in my opinion be lost.

I prefer to
measure my performance against my own capabilities rather than the
achievements of others.


In that sense, I’m slowly realizing "best" is more of an internal measure for
me. I think that personal fulfillment is about finding and maintaining your
optimal challenge/skills balance. If that measure takes me to 5 million or 50
million, so be it.


The other interesting thing about life is how many different spheres of
excellence there are, and how it requires balance to address more than one. I
want to be a great trader, but I also want to be a great educator. Relationships
add yet another dimension to the equation. For example, a billionaire with 4
failed marriages is not a success in my book.


All that to say is, I appreciate a challenge as much as anyone but wonder if
putting such a high priority on one’s measure invites the risk of letting your
desires own you, instead of owning your desires.


Please feel free to email me with any questions
you might have, and have a great trading week!

Chris Curran