Short-Term Trend Down…Long-Term Trend Intact

Last weeks price action is S&P was squarely down…no argument….But let’s keep the recent pullback in perspective…Look at any long-term chart of S&P..what trend do you see? Answer: Uptrend…Next…How deep percentage-wise have the corrective “symmetrical” pullbacks been? Answer: Minimum 4.5% to Maximum 5.80% OK…What is percentage measurement of last weeks pullback? Answer: 4.32%  So before everyone goes off the deep-end thinking this is the “big one”, the recent pullback is within context of prior corrective pullbacks observed historically. To keep in perspective, which most traders do not, this price action is well within the normal back n fill profit taking given the unprecedented strength of this bull market. As we opined last week, the “bus got too full” and Gus wanted to get off…Stan needed to make a new plan.

Overnight trade has price +8.50 handles from globex open…Today is Cycle Day 1 (CD1) beginning a new cycle…The goal of CD1 is to establish a secure low from which to move the auction higher…Average Range = 18.75 handles

Friday’s Range Target (1910) handle hit perfectly and retested late in session…So we can mark 1910 as a more important low…This level may possibly be tested again to make sure it is indeed secure, so be mindful of this occurring…Given the context of last weeks pullback, we would anticipate the 1910 to hold successfully. Failure to hold opens up a deeper corrective move.

Scenario 1: IF the ONL (1021.25) holds, THEN expectation would be to push higher to test PDH (1932.25) and STATX Zone between 1930.75 – 1933.25. Expectation would be a rejection by sellers at this zone. IF converted, THEN upside measures 1936.75 Breakout Target followed by 1941 Three-Day Central Pivot (3D CPZ).

Scenario 2: Violation of ONL calls for potential to retest the 1910 level…This level is already a deep extreme, so expectation on CD1 is to establish a secure low…Look for successful test, if any, during pit session trade. Violation of PDL (1910.25) would force further long liquidation with downside targeting 1906.25, then 1902.25 – 1899.50.

Trade Strategy: We’ll be flexible to trade both long and short from key Decision Points highlighted above…Short-term trend is down, so failure at upper edges to establish shorts…Successful test of low levels calls for long opportunities.

Remain Disciplined…Follow the Rules…ALWAYS USE STOPS!

Good Trading…David

Habitude Twelve
I am disciplined. I behave in a way to reach my goals. I do what I intend to do. I have the intent to win through right actions. I will be patient for patterns to emerge and mature. I am decisive. I decide easily and act promptly. I act in the right way and right on time. When there is nothing to be done, I will wait.


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