We have just seen a fast, high volume rally off of the day's low. I suspect that this is a demand shock and if so the market will hold the 815 level (halfway point of today's range thus far) on any retracement. I will be very confident that the short term trend has turned upward if the red line at 825 (today's high) is taken out on good volume today or tomorrow. The purple dotted line on the 30 minute bar chart is the midpoint of yesterday's range - also a resistance point but less important to me than the 825 level.
3 comments:
no demand shock--just the perils o being short in this market with all this government talk going around--some talk of help for mortgages, i did warn you not to be short around the stimulus
Fishy rally, lots of short covering. Not confident we're done on the downside yet. Think there may be one more leg to go. My 401k would be happy if I'm wrong.
John M
Hi Carl,
I know you don't think much of EW as a trading tool, but the most probable wave count has the sharp rally at EOD today counted as a wave C in an ABC correction following wave 1 of 3 of 5 down. If this count is correct, once this wave tops out (832 - 840 on the e-mini's), we should see a very sharp sell-off to below 800 and possibly to new lows.
C waves in EW are characterized by rapid price moves with high volume.
Bottom line is that I will wait and see what tomorrow brings. ES above 860, invalidates this EW count, so that would be bullish. But if we sell off tomorrow (maybe a small gap up first) with high volume, then the bear is still in control.
Good luck!
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