Trade What is, Not What Should Be
The SPX was -3.6% in January and has now declined -6.1% so far from the [1/15] 1851 high to the 1737.92 low last week [2/5]. The index had consolidated at the 100DEMA 1771 zone for five days in the last week of January, but obviously took that zone out last week with a double bottom of 1739.66 and 1737.92.
However, it bounced off that double bottom to close the week +0.8% to 1797.02 which is right at the 50DEMA. We got acceleration in volatility last week as the SPX finished -2.3, +0.8, -0.2, +1.2, and +1.3%, in addition to an expansion in volume, and enough headline news- flow that generated ample trading opportunities, especially for High Probability-Low Stress day traders that use specific day trading price symmetry and patterns.
In the last commentary I included some actual examples of the HP-LS defined price and symmetry strategies that stand the test of time, and that is how markets react because trading price, contracted and extended volatility have the same parameters regardless of electronic execution, algos, high frequency trading, or anything else the brain dead regulators allow to screw up the markets.
I have included several examples of basic HP-LS trading strategies from last week, and will continue to include this trading section in each of my commentaries.
In the first example you see that on 2/4 LMT made a 144.70 signal bar low o the 9:45AM bar with the one day -2.0 Standard deviation zone [-2.0 Volatility Band in my service] at 144.39 and the -1.5 VB at 145.23 This is what I call a Trap Door and it is one of the most frequent 1st hour trading strategies. LMT is an Above-the-Line Focus list stock [see previous commentary] and the entry above 145.50 on the 9:50AM bar was positive.
On 2/6 LMT had another opening period defined trading setup as it formed what I call a 1st Consolidated Break Out [1st CBO] pattern which was also a contracted volatility pattern, and in this example it was a “31”, which is 3 bars range within the first bar, The entry B/O entry above 151 was exited below 152.25.
AXP is also an ATL Focus stock and in this example the stock pulled back from an opening bar 86.89 high to a signal bar 86.78 low on the 10:45AM bar versus the previous 85.76 day`s high, and the 50DEMA at 85.89 The entry above 85.96 went trend up to extended VB zones so you were trade positive regardless of how you managed it.
There is some significant time symmetry in the first week in March, and if the current SPX bounce fails and reverses down to the 200DEMA zone or lower going into that period, or else continues to advance higher into that time symmetry, we will anticipate a reversal depending on the technical O/S or O/B condition at the time. There has been a reversal of some sort at every one of these timing periods for the entire bull market since the 3/6/09 667 low.