You may or not know but it was a true FACE-RIPPER rally today. Last night I was thinking all the ingredients where in place; low volume this week due to power outages and the coming vacation weekend, a market that has been sold very hard for some time, and a new short interest high for the NYSE. Perfect set up for a real squeeze higher.
Here is my clumsy graph for the S&P 500 after today (click for larger):
-I have been stressing a close OVER 1180 would get me more interested in the market as a buy
-1200 is another important level
-Market is above both now
The volume today was about as bad as it gets, but you cannot have everything. If trading was easy we would all be rich. And bored.
So is it all honey and sugar from here on? Do markets crash again? How would I know, I just work here!
Seriously, what I think we have now is the best long trade environment in some time. What makes it so good? The trades are backed by some key levels and the exits are clear as can be. All the "bottoms" and all the "important candles" of the last month or so never had everything working for them. Now they do.
I have been on the sidelines for a while because the market did not support my trading style. I cannot be on top of things all day long, I have to work. With a bit of support now and clear areas that signal trouble, stop losses might even be in place again! Amazing! For weeks if you were playing a spot a stop loss or cover was sure to get you executed during the wild swings that have been happening. Consider that if the general market can trend to the marked area of S&P 500 1250-1260, or even if it starts to roll over again:
-There is support at 1200 now
-Cut all trades at 1180, no wishful holding
Simplified trading. No emotion, just numbers. Like chips in poker.
I would point you to my "Go To" guy for these things, Mr. ChessNwine. Back on August 17th I noted a great post by Chess which set out the following scenario going forward:
"..one scenario that I am seriously considering is that we actually start to roll over for a few days and see shorts scramble into those bear flags proving true. At that point, we make a higher low on the S&P and then stabilize and turn higher. Since the market will usually do that which frustrates the majority, I think this scenario will frustrate those who have committed substantial capital looking for a market bottom as well as those bears looking for confirmation of bear flags in order to short. Here is what it would look like.."I did not include the chart, but now I have secured permission, here it is:
To sum up, this is a supportive environment right now for long trades. The best in a while. Discipline on the last few drops really broke down, but now is a good time to make some moves but be ready to stick to your targets. Both to the upside AND downside.
I am so behind, and would like to do some screening tonight so that is all.
Added: Not all! Check out the only thing worth seeing from last night's MTV's VMA award show. Adele with "Someone Like You":
Have a good night.