S&P came roaring back from a deep deficit early in session on fears of increasing problems in Portugal (PIGS) to close the session in upper 25% quartile of the days range…Although the Bull is quite resilient buying the fast sell down, keeping the intermediate and long-term trends intact, recent selling activity has exposed some cracks in the bulls armor plating. Next week begins corporate earnings release, and as we have opined, money managers usually do not make new commitments to their portfolios…So, with Fed tapering coming to an end in October, corporate earnings, hence economic activity, will need to take the drivers seat for the Market’s future direction.
Let’s look at today’s hypotheses:
Scenario 1: Prior Day High (PDH) 1964.00 is “key upside marker” as it represents the upper edge of 3-Day Value Zone. IF price can penetrate and convert this level, THEN there is a 65% chance of reaching upper target at 1968.50.
Scenario 2: Failure to convert PDH (1964.00) suggests the need for further price consolidation within 3-day range…Key downside marker is 1958.25, which represents the 3-Day Cycle low and micro-composite Point of Control (POC). Lower Value is 1954.50… Violation of this level calls for total reassessment of bullish resolve.
Trade Strategy: We will maintain a two-sided trade approach with recent range activity…We will look to fade (short) upper highlighted price boundaries on evidence of failed auction, anticipating a reversion to 3-day mean…This does not preclude us from fading (buying) lower value-zone price edge…So flexibility and selectivity is tactical trade strategy. As always, we will provide definitive and clear trading opportunities in the Trading Room.
Focus on the Trading Process…Not the Outcome…ALWAYS USE STOPS!
Good Trading…David
Habitude Eight
I can recover from any setback. I have an attitude of abundance. I affirm abundance in the universe. I know I cannot begin to count the stars. I realize the ocean doesn’t care whether I go to it with a bucket or a teaspoon. I know the market provides a river of opportunities. I invest in my capabilities. I will be happy with my results.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURES RESULTS