Yesterday’s Trade Strategy was spot on which made for a nice profitable session. Current price action reminds us of “Bricks on Ticks” where each rally attempt produces lower highs and adds more and more selling, thus creating heavier weight for the bulls to carry. Either the bulls get a boost of strength and energy to lift this weight or it will become so heavy as to break hard to the downside. Based on current evidence the latter scenario seems more likely.
As for today’s levels…1621 handle has been again tested in globex and so far has held..so that level becomes “key marker”…IF violated, THEN downside to 1610 – 12 zone is targeted. Recapturing the 3D CPZ 1632 – 35 would surely help the bulls…Failure to exceed this zone could create additional selling.
One caveat is that this recent pullback from the highs which measures -3.75% (63 pts) is within the context of normal bull market corrections. So if recent pullback lows can hold, the larger degree uptrend remains intact. Here is a snapshot of “symmetrical pullback” posted to twitter: http://twitpic.com/cvasb5 .
I take the long term view. I am willing to lose in the short term. I understand that losses are a necessary cost of doing business, like inventory to a merchant. Drawdowns are viewed as temporary. I realize that my wins and winning periods are part of the broad process. Each trade is but one in a string of trades. What is happening now is one piece of a much larger puzzle. Because of this I do not get overly euphoric or despondent.