We thought a pullback and a break down from the rising corrective channel discussed on the previous S&P post would be a more likely scenario, and that’s what the market did.
One of the things that many experienced market participants tell us is that we should not trade the first half hour (according to some version, the first hour). Why not? I mean, really, why not? Yes, I understand the reasons and arguments behind it. But should we not, at most, treat is as a guideline?
Look at this 15-minute chart of SSO.
Notice the large black candle off the top of the channel line. I had made up my mind that the ongoing move was corrective. 5-minute bars were overbought. Price was being tossed away from a resistance line.
Why should I not short the index? Why should I be bound to a clock? Does the risk/reward profile in the above charts not warrant a short trade?Onto the daily action, Index is being ping-ponged between 850 and 912.
Volume of the decline was low, and breadth was slightly negative. No disaster, more like consolidation, or indecision. Tomorrow is the FED show and the market crowd will count the seconds as they tick towards 2:30 pm, or is it 2:15?Some mid-term buy signals are still valid. That being said, notice that daily Stochastics have give a sell signal. Stochastics give their signals faster than MACD, or breadth indicators. And sometimes, they reverse without a follow up signal from more lagging indicators. Still, I intend to treat it with caution and see if the index can finally get out of the ongoing range.
Not much else to say really, just the obvious: this is still a trader’s market.
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