Early strength in Nasdaq pushed the indexes to new all-time highs, then sold off hard on heavy volume leaving in its wake an “excess high” and creating an “Outside Reversal Day”. We have been concerned that traders have been lulled into complacency and there was an increasing probability for a Change of Character (COC) developing. Here is an excerpt from yesterday’s DTS: “if supply continues to build and satisfy the buyers, price supply/demand equation may soon hit a tipping point…Stay Alert during Summertime…As Mr. Market tends to make swift and abrupt changes just when everyone is lulled into complacency.”
Each day we outline two scenarios (bullish and bearish) each with potential price targets. Yesterdays upside price target potential was 1958 – 60 zone…dead hit with 1960 HOD. Our lower projected price target zone (1938 – 40)…another dead hit as 1939.75 marked LOD. Recently price action has been very tight trading within very narrow ranges…Finally price ranges expanded offering PTG Traders ample directional trade opportunities with Bear Stacker and Premium / Discount Setups. An overall solid trading session for PTG Traders.
Yesterday’s reversal has left two distinct support and resistance zones on the profile…More important resistance can now be marked between 1950 – 1955 zone and support between 1938 – 1944 zone. These zones will be critical barometers for future direction…Penetration or Violation of these zones will determine the Bulls or Bears resolve.
Scenario 1: IF selling remains dominant with violation and conversion of PDL (1939.75) along with break of key support, THEN lower price targets project 1929 – 1927 zone.
Scenario 2: IF buyers respond in sufficient quantity and strength to any additional selling, holding key support, THEN retracement zones are 1945 – 1946.50, followed by 1948 – 1950 zone.
Trade Strategy: We will maintain a net bias to the short-side trade from key zones highlighted above as expectation of further COC development to favor profit-taking as the 2nd Quarter comes to conclusion. This does not preclude buying off of key support zones with proper setups..as we will remain flexible to seek out two-sided trade opportunities.
Focus on the Trading Process…Not the Outcome ALWAYS USE STOPS!
Good Trading…David
Habitude Nine
I will identify my mistakes and learn from them. I am optimistic, realistic and honest. I will not make up stories about the good or bad things that occurred in the past or are happening now. I admit when something is not working. My optimism gives me faith and courage. I will not fall prey to blame and fear.
PAST PERFORMANCE IS NOT INDICATIVE OF FUTURE RESULTS