This Pattern Must Play Out Before Direction Unfolds
Today’s column will be brief for one simple reason, there is not much going
on. Take a look at the chart below, it offers a valid technical explanation as
to why the price action (HVT) has been
nonexistent:
The 5 Wave advance from March 12 was impressive, no doubt about it. In fact,
as I have been mentioning recently, the move has just retraced (almost) 38% of
the move, 854. The problem, at least the way I read the charts, is that until
the current A-B-C pattern plays out, expect more of the same.
It is not really clear which way the move will be, in fact it is entirely
possible that there could be another A-B-C move before the direction unfolds.
This does not mean do not trade. There is simply no way to know ahead of time
when the trading will loosen up, but like this Thursday and Wednesday morning,
it only took me two trades to realize that I was better off sitting on the
sidelines. If you were doing HVT and were
active for the last two days and had a high degree of success, my hat is off to
you. I personally am not seeing a good risk/reward relationship
presently. Luckily, the last week or so the trading has been pretty darn good. I
have made up for several weeks of marginal trading in just those few days. So,
in light of the recent volatility, a few days of consolidation is the norm. Each
day draws us closer to better trading.
If I may say, in
Monday’s column I said that a short-term top was at hand after watching all
the so-called “market experts” fall all over themselves to proclaim that the
market was going higher, EVEN after last week’s meteoric rise. Well, if there is
one thing I have learned after nearly ten years in this chest-pounding business,
it is this: When the talking heads who manage other peoples’ money (not theirs)
are unanimous and with conviction, it typically means the move is well into the
ninth inning and they just noticed it. Just my luck, after making this statement
the market will likely take out last week’s highs today and go to 1000 on the
S&Ps.
So, unless the market unfolds, keep it light.
| Support/Resistance Numbers for S&P and Nasdaq Futures |
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* Indicates a level that is more significant
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