BarroMetrics Views: Context and Trading

One of the areas I feel is most neglected trading education is the importance of context.

There is a pattern I use in my trading, Wolfe Waves,  that I find useful in the appropriate context. We are seeing the pattern and its context in the S&P today.

Figure 1 is the e-mini futures, Sept contract, including Globex session. You’ll see that the S&P is at the Primary Buy Zone. The low 1241 (1243 day session only and 1249 basis cash) is not only the beginning of the Primary Buy Zone but also the 2011 low. If we see  acceptance below  this number I’d say the high for 2011 is in. So, the March low is an important number.

Figure 2 is a 290-minute chart of the same instrument as Figure 1. I’d expect the low to terminate somewhere on the trend line that has joined 1 & 3. I have drawn the target (1-4) line for the sake of completeness. I don’t use it that often in my own trading.

So there’s a head’s up folks. If we see acceptance below 1241, look for a watershed type decline; otherwise I’d be looking for a high above 1576 and below 1736 by Sept/Oct 2011.

FIGURE 1 Daily S&P

FIGURE 2 290-minute S&P

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