We are seven bars into the reaction wave, up in pre-trade, but I still think we have a double top forming and I have opened a short line on the ES. Volatility has been very high, volume show a divergence in the last run up, and I'm measuring a short top.
If we are not at a double top, we are close to the end of this reaction wave anyway. I will build my short position carefully.
Let's see what happens here. I will be away from the desk most of the day, so stops are in place just in case.
10 comments:
Hi, David,
Thank you for the post. I am with you. Funny thing I noticed is that last night the whole world celebrating China good news, while the Chinese stocks A shares closed lower...
David ,
Let me share some observations ,
The Humps , zigzags , failed corrections , put a name have each been one month , in fact the last 3 ended on the 2nd of the month .
Last Sunday I was looking at charts long time charts , like you said it gets rid of the noise and lets you step back.
I looked at the March lows( on the monthly chart ) tell now, 5 waves up , but wave 5 seemed way to short.
If I channel the rally on the monthly,touching the top 5 would go to the 1060ish area , very near the 61.5 retrace .
The angle would take us to early Dec.
If I do a fib ratio of the legs up
a leg 5 of 134 or so gets me a 1.61 ratio, ( 1060ish), leg one was long.
Sadly that is my case for 1060
My best
Hey Payline,
I have the monthly candlestick up now. I am seeing a wedge with the current month split with the bottom trend line. If we are to stay in the wedge, we need a close near 1140 which aligns (slightly higher) with the 50% retrace at 1120. This remains my outside targe. I think we reverse before then...
I am in a conference so I haven't been able to really trade or anything, and I shorted early this morning, noticed that I made money, so I then covered. I would much rather be lucky than smart. We might have 5 or so more days of choppiness, but I would think we are close.
Looks like JNK has topped out and looks like the financials have topped out. We might have another push. I think I will wait for that push up to 1105 again and re-enter. I will research potential positions after an exam tomorrow.
1140 would be insane.
We broke bottom trend line on the up channel
payline, this is the same old game. corral in the shorts, squeeze them for 4-5 days, then hold their feet over the fire for 5 days or so. Maybe my timing is off, but I would think we will be relatively flat for a week or so. I really should be asking some of the people at this conference about the risk of another financial collapse as currently perceived by LICs. People keep joking about it... (I'm an actuary, they tend to have a weird view on things.)
David , Thanks , And I hope we reverse before , either 40 or 60,
but making a case for it helps to keep us flex able .
I sold out my longs today , well got stopped out, and did not re enter , debating getting back in after hours .
it looks like we have triangles in the XLF and Spx ? as we where on the rise into them , they should break up ?
Looking for one more trip to the top of the March trend line and down, hoping its not 2.
Thanks a bunch David ,
Kph , anything is possible , Best of luck out there.
Hey KPH, Payline, ww,
Yeah, I did not like what I say late yesterday and early this morning in the pre-market. There was some heavy block buying (50-100-200-500 contracts a pop) that just drove the price way high and killed my positions from the day before. All of that to get the market off to a strong start - followed by the bare minimum needed to keep it closing right at a double top level. This does smell like a trap. I am glad that I shorted the market this morning and recouped my losses from the overnight action. For now, I am flat on the futures scene and will wait to see how this plays out.
Keep in mind, we are right about at the top of this reaction high cycle. The rise in a reaction cycle rarely lasts more than 9 days - we are 8 days in now.
See my RSI post...
hi david.. the gap up sure smelt like a trap - just like the big gap a couple of days ago - how convenient to hurdle past resistances to hit all the short's stops..
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