Yesterday’s trade action conformed nicely to our Scenario 1 playbook…Early strength and conversion above 1970 lead to an upward move to top of multi-day range near 1978. Although price probed the upper edge of range, it failed to convert on a closing basis, as earnings from Mr. Softie and Apple were front most in investors view…Does failure to close higher infer that Mr. Market is getting a bit tired? Perhaps…Bulls have done a remarkable job of supporting price on any downside pressure, but so far have not been able to stage a renewed high volume rally…So consolidation continues…
Scenario 1: IF price can penetrate and convert 1980.50, THEN probabilities favor reaching 1982.50 – 1984.50 zone, followed by TargetMaster Breakout zone 1987.25 – 1988.75 based upon the 3-Day Cycle expansion projections.
Scenario 2: Failure to convert 1980.50, suggests some exhaustion and need to find fresh renewed buyers…As most of current long-side holders is considered “old business”…Unless new buyers materialize above 1970 – 72 zone, price is vulnerable to a setback, which could push down to 1968.25, followed by 1963.75 – 1965.75 STATX Zone…Below this zone and long liquidation is more likely to unfold…Downside extremes measure back to 1954.50 – 1957.25 zone.
Trade Strategy: We have been leaning primarily to longs side in recent days…We will now become much more flexible to the short-side if price exhibits further exhaustion signals as money managers absorb recent earnings reports…Without any high profile excitable earnings beats, price action may become heavy…We remain flexible to trade both sides in alignment with dominant market forces.
Stay Disciplined….Follow the Rules…ALWAYS USE STOPS!
I am at ease with controlled risk. I will risk and I will win. I am courageous. I will take a chance. I manage risk to my comfort level. Risk keeps me on my toes, keeps me alert and at the top of my game.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURES RESULTS