If You Want To Play In This Type Of Environment, Try This
It has been a while, — nearly three years — but the
buy-the-pullback crowd
is in full force. Naturally, if this action continues, the tape will eventually
loosen up. In the meantime, stocks are moving higher in the face of every reason
they should not. Sounds like the beginning of a “new” bull market. While I
certainly do not know if that is the case, it does explain why the tape is so
tepid. There are still too many non-believers, and until that changes, the tape
will continue to defy logic and meander higher at a snail’s pace. Be patient, a
break is inevitable.
As I have continued to stress, the only thing we can do is sit and wait
patiently, you will find a couple of setups each day. Remember to always
identify areas where the S&P’s have been exhibiting 3+ point “bursts” in the
direction of the trend. Additionally, the bars that make up that move should be
spaced out, in a stair-step pattern like in the chart below.
Notice the same action on this one as well
Now, on the flip side, there will be many times when the market will move 3+
points, however not only will it take longer, but the action will be labored.Â
Look at the chart below:
Yes, the travel range was 3+ points, but each bar lost momentum at some point
before moving higher. This type of back and fill action is tough for most HVT’ers to tolerate. Also, look at the stochastics, unlike most fluid moves
there is also no range expansion in the stochastics. The action here is a
constant crossing back and forth, this indicates chop and indecisiveness. If
you want to play in this type of an environment, reduce your share size, push
out the time frame and look for specific patterns.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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My new trading service,
“Dave Floyd’s Trading Room,” through which I offer live real-time
audio commentary, analysis and alerts is now available. I encourage you to check
it out.
Click here for more information.
As always, feel free to send me your comments and
questions.
P.S. I also have a new trading module
available which teaches how to trade my HVT style through bar-by-bar chart
simulations.
Click here for information about the module.