T he market responded to the mini agreement by the political teams, opening with a gap of some 20 points. The near term threat: a move to sell off some by profit takers. This is not that unreasonable with a range day after the gap, and investors beginning to throw in some puts.
THE PRE-OPEN LOOK
[08:40] <CM> goodies for today 48.5-44.75-41.75
[08:42] <CM> a +20 gap even on the Globex today we will likely see a trading range until all the talk settles in Washington
[08:43] <CM> some econ news later in the week to note. if they continue to talk and show progress, we will see es eventually move into 1500 and possible 1652-83 for the year highs
SOME EARLY THOUGHTS
[09:38] <CM> something to consider and will discuss in more detail in blog later today
[09:39] <CM> in a trend, place prior trend orders around those 50CB's with preference to those on a PB and with a signal. it will be considered an early entry to the trend continuation after the CT PB reverses. (chart omitted)
[09:40] <CM> today: 1445 46.25 47 (EARLY 50CBs)
[09:45] <CM> FBO of LB will watch for a range run to 45 then 42
[09:46] <CM> no signal will be interesting to see how serious bear will be new longs will be around the LB
[09:50] <CM> note: the priors were still valid since we were inside the range [09:40] <CM> today: 1445 46.25 47
[09:53] <CM> you should know the target.. (chart omitted)
[09:54] <CM> stop to 50 win-win from the LB area
[09:57] <CM> top of b2 roughly 50CB of B5 valid stop as well
THE ANALYSIS:
PA had the large gap then settled into the BOT range. There was a bullish trend from around 7 AM EST, with new entries around 9:15 when PA stalled at the MB support. This was the pre-open PB TL for the bear after a slight gap to the LB failed. We have talked extensively about the BOT levels. Today we added some new set ups for our members to consider, a play off the 50CBs.. It plays something like this:
A trade entry-exit will be considered at a BOT level, a 50CB, or at a trend line break where the TL is the counter trend PA to the dominant trend.
- In a trend, pull backs are counter trend until we have a reversal. While CT can be played, with trend positions will offer a better return.
- We will always consider where the BOT levels are located. A CT that develops at a level will be considered stronger, and has the potential to be a trend reversal.
- We will look for 50CB bars, and those with a signal will have more importance
- In a trend, a 50CB level will be considered for an entry after the PB stops, and resumes the prior trend.
- A CT PB TL will be drawn (or see it visually) to consider a BO entry with the dominant trend.
Today we saw PA run for the LB, fail, and return to the MB. This return was a bear CT move inside the BOT Levels and inside a dominant bull trend.
PLAIN: NO LINES ADDED
WHAT YOU SHOULD SEE
The dominant bull TL as PA moves up the BOT levels; The CT PB TL; The 50CB at 1447 and 1446.25 50CB levels. All these points are now of interest in trading and create different points "of comfort" for the trader.
- In this case, you would enter a long at the MB that is support, at the BO bars 131 or 132, at the two 50CB levels and wait to see if PA continues the dominate trend.
The LB breaks and stalls and we noted that there was "no signal" let's see how committed the bears will be.
- In this case, your entry is the LB; The 50CB of B3
PA breaks for the BO-5 level and creates a bear gap between PA highs and the BO-5. This is where you look for a reversal. Draw a TL and enter below it, enter at the 50CB of B5. BOT rules look for a PB to the LB and the longer term bull TL. A H&S variation gets PA back to the MB area.
No break of the TL, follow rules and hold to the targets.
The entry in the chat room was at the TL-50CB-MB at B65 and 66.
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