BarroMetrics Views: Flexibility III
First off, an apology to all my readers for the break in posting. There is a particularly virulent flu in Singapore at the moment, and I am catching my fair share (twice in about 8 weeks). I seem to have gotten over the worst of it. Hopefully all will be well from now on.
Turning to today’s subject, the price action of the past week or so shows what I mean by ‘flexibility’.
For reasons I shan’t enter into here, I took the view that the S&P had a bearish bias. In Figure 1, we see my entry. At the time of entry, I felt that if we did see a sustained move down. we’d see a test of 1000. From my journal: “Sure, there is support at 1101. I doubt that will hold, given the context”.
Well, I was wrong, not only did 1101 hold, it provided an 18-d Spring Change in Trend Pattern.
I’d like you to have a sense of my mental frame: I was very bearish and not 100%. As a result, I was more emotionally committed to the bear side than normal. So, it could have been ‘natural and expected’ for me to ‘ignore’ the bullish Spring.
‘Luckily’ the routines I have come to rely in kicked in, and I automatically closed out all shorts as in Figure 1. The close on the day of the Spring did not qualify as a bullish-conviction bar or I’d have closed out that day. I’ll say something about ‘routines’ in a forthcoming blog.
So, what now with the S&P?
On Friday, we saw a neutral sell setup bar at the Death Zone. If we see a bearish-conviction-close bar, without seeing acceptance above 1197, we’ll have a possible Death Zone trade. This setup will be confirmed by a bearish-conviction-bar close below 1139. If that happens, we’ll be faced with two conflicting signals - the Spring BUY and the Death Zone Sell.
The key will be the volume on the way down. The ‘Barros Average Volume Per Bar’ in Figure 1 shows that the Up Volume has been poor. This suggests a possible Spring Failure.
But that is for a possible future. Right now we have a Spring Buy signal that suggests we’ll see a break above 1231. The volume down on the next down move (assuming it comes before acceptance above 1197), will probably be important.
FIGURE 1 18-day Barros SWing Daily S&P
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