Friday, November 6, 2009

Interesting Pattern

I know I had mentioned I am not always going to justify each trade but this one was too important to pass up. I am going to restate some stuff again (sorry but I need to make this point).

"The largest pull back during our incredible rally was back in june/July for a total of 87 SPX points. Our current pullback comes in at a total of 68 with a low of 1033. You all remember the significance I had mentioned for our 38% retracement level at 1016 SPX - if we do see a sell off towards this level we will be adding a total of 17 points for a grand total of .... wait for it ... wait for it ... yes 85 points pull back - which happens to the same size pull back we have had back in June/July."

Additionally we have been talking about the same short entries all week now.

"Short setups 1061-1062 with stop at 1064.50. If that fails short again at 1068 with stop at 1073."

Both of those targets worked out pretty well in terms of price and stopping at that range for resistance (at least short term). Now I had also added my second range in case the first fails which was very close to the previous resistance. Thus far we have not violated this last range and it is my feel we will not violate at least on the short term. I will be looking for another possible short entry via ES on Sunday night so I will keep you all updated. For now I am quite happy with my few puts (feels so weird only having 10 contracts). Well either way here is some amazing comparisons.

This is a comparison between July this year and now. I have circled the important areas.

Green Circle - we are making a higher low
Blue Circle - we breach the previous swing high by a marginal amount making everyone believe the higher low from green circle is an indication for going back to retest the upper ranges and possibly make a new high
White box - whipsaw heaven with big wide ranges but close prices of the previous days close to one another (though for us a lot happened pre-market today)

Additionally both hit the perfect target of the 61.80% retracement. From here it would be a perfect place to revisit the 1016 SPX range which was just a few points away the last time. This would almost play out exactly as before if we are indeed seeing this type of move.

1 comment:

  1. Hey Chaugs, glad to see you are getting back to you roots: The disciplined, methodical trader that caught my attention back in January. I look forward to watching you build your portfolio back up.

    Break a leg!