Markets are up today, July 1, which is to be expected around 80% of the time. The question is: does this mark a resumption of the uptrend? And the answer is mixed. It is clear that for the Qs 36.50 is the demarcation line. This morning the Qs gapped up, corrected to exactly 36.50 and are now headed toward the June high, but the pattern itself is not impulsive, leading me to believe that we are in another flat correction or a triangle. This is definitely bullish, but also implies that the June low may be retested before the uptrend resumes in earnest. It will take a move on volume below 36.05 to confirm that wave c down is underway. Staying above 36.05 would be quite bullish.
The Dow, on the other hand, is clearly rising from its recent low in a zigzag(abc) or a double zigzag, which also means the June lows will be retested. However, the upside of this correction that has now extended could be 8665 or higher. Once 8394 is taken out, we will know that wave c down is underway.
So what should traders be doing right now? Preparing. The market is in a trading range, a neutral market condition. As such, you should be preparing for a breakout in either direction. While we have been speculating that the breakout would be to the downside, the fact is it could go either way. Perhaps you are in cash, if so, that is probably the best place to be until there is more evidence. Another approach is to be mixed in long and short positions. If the market advances, you may be stopped out of short positions and you can add to long positions. If the market falls, you may be stopped out of long positions and you can add to short positions.
The main thing is to have a plan and stick to it. You are not going to win all of the time, but don't let this trading range environment churn up all of your profits.
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4 comments:
Why is 36.50 significant when the high after June 23 but prior to today 36.75 ?
Why is 36.05 more important than yesterday's low 36.11 ?
Regards,
dave
Noon EST
So far we haven't gotten above the broken hourly uptrend line from 6/23 let alone the broken daily March uptrend line.
Regards,
dave
Dave,
36.50 is just an observation based how the Qs have behaved in the month of June.
For 1), the 0.382 RT to the 55.07 Oct 07 high in the Qs is 36.52; 2), the high of 6/1 was 36.50; 3)the high of 6/26 was 36.50, 4) the early morning low this morning was 36.50 and 5) the Qs have not been able to close above that level the last 3 days.
If you draw a horizontal line thru 36.50, it looks as though the Qs have been "vibrating" around 36.50 for the whole month. I don't really know why, but the market just seems to regard that level as being important.
Hope that helps,
Craig
Dave,
I also meant to add that 36.05 was the low of the Narrow Range day, and also appeared to be the low of a b wave on the 15min/30min chart of the Qs. Sometimes, the market will attempt to breakout on one direction after a Narrow Range day but go nowhere for 1 to 4 days. It will then move powerfully in the other direction. The key levels are still the high and low of the Narrow Range day.
Another example of this phenomenon is 11/3/08. The Qs moved higher the next day, but then reversed downward for most of November.
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