For one thing, Rule Number Two – The trend is your friend – might not apply. Case in point the last 5 days. For more than a month before that, the market broke Rule Number 1 – Don’t fight the Fed. The last 5 days have been merely a gentle reminder of the Rule. There’s more to come. Breaking the Rule will lead to an appropriate, and likely disproportional punishment.
As for the trend being your friend. It’s a matter of perspective. Which trend? The major trend? The intermediate trend, or the minor trend? Of the 3-5 day cycle, etc? Here, we focus on the latter. For the bigger picture, I suggest the Technical Trader.
As for the very short cycles of concern here, we’ve been in an up phase since Monday afternoon. As I warned it might be an up phase in name only, as the market has drifted and bumped like an old trolley car with worn out ball joints. Momentum indicators have worked their way higher, from extremely weak to very weak. But prices have not.
And time is growing short for this up phase to break through resistance. If it doesn’t happen today, say, by breaking 4153 on the ES 24 hour S&P fuguetures, then the next big move is more likely to be a downside breakout. It’s not a given though. The cycles may simply keep damping down until the head traders return from their summer homes in the Hamptons after Labor Day.
As for any potential downside fireworks, I think we’d need to see a print below 4105 to get that lit up.
To understand and profit from the big picture check out the following.
- Swing Trade Screens – Hit the Jackpot Last Week, New Shorts This Week August 22, 2022
- Stock Market Uptrend Cracks – Look Out Below August 22, 2022
- Has Rule Number One Been Repealed? August 18, 2022
- Swing Trade Screens – Buys Overwhelm Sells, It’s Late But One Sector Looks Ready to Roll August 15, 2022
- Yikes! August 15, 2022
- Mildly Bullish Outlook for Gold Holds August 13, 2022
- “As Good as It Gets” Was Good While It Lasted August 6, 2022
- Treasury Confirms Supply Tsunami We Expected – Will Obliterate Everything August 3, 2022
- Withholding Tax Collections Solid in July, But Here’s Why the Party is Over August 2, 2022
- The Bond Rally That Fooled The Majority And Didn’t Help Dealers July 27, 2022
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