BarroMetrics Views: A Question of Flexibility II
Up until the close of Monday, I’d have said that the probabilities favoured:
- A breach of 1100 before Oct 3 to Oct 6 and
- The cycle highs of Oct 3 to Oct 6 would prove to be a retest of the breakdown point 1100 or perhaps 1000. (See Fig 1)
But, yesterday we saw why Pete Steidlmayer says, you want to trade on present tense information.
On Thursday we say a strong bar down and on Friday, we saw an attempted rally capped by the sellers. The circumstances made it idea for the sellers to extend their gains.
BUT…note…..
..Figure 2: showing the E-mini Futures, basis Dec with the Volume Breakdown Indicator. Notice that until the 10:00 am EST bar, the bear case was doing well. However, at that bar, the bulls took control.
The market tried to sell off on good volume but was unable to break the day’s low. A re-test came around 12:30 PM.. When that failed to break the day’s lows, the bears tossed in the towel (next bars up on light volume suggests the market went up because there were no sellers). At the 15:30 bar, the short covering began in earnest.
The ability to read the market’s footprints is the difference (I believe) between the very successful trader and the average one; it is this ability to manage a position, rather than an ability to forecast prices, that separates the two the two.
Figure 1 S&P Scenarios
FIGURE 2 VBI
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