I could just say, today’s answer is in the 9/20 “Advanced Pivot Patterns” training video.
In the 9/20 video (available to subs only) I reveal the same patterns that exists in all but the Q’s after Thursday’s trading. The current stage of the pattern is one of a warning that upside momentum may be waning and more importantly, if we get an opening range breakdown below the pivot in the IWM, SPY or DIA it should be respected, if not shorted.
For those of you who did not see the video the condition I’m referring to is one in which the market spend the majority of the day trading below the pivot after a series of days in which the pivot has stepped up and not been tested.
The other condition I’ve been writing about as the markets climb is that of the markets not trading below the prior daily low. All 4 did that yesterday but managed to recover. A close below a prior low would be a significant negative event.
If all this sounds bearish it is, IF… the markets trade lower. Specifically, the basic key reference points of support are now more important indicators of downward momentum becoming a reality. Subscribers should know how the patterns should line up for the more significant breakdowns. Everyone should be focused on the OR’s, the floor trader pivot, S1, and the prior day’s lows.
If the market does not go down as measured by these points, then the important question for more upside is, have we seen enough compression to have a trend day up. Here’s how I see it:
SPY – No. It’s been a sloppy wide two days resulting in not only 2 dojis, but would also form one big doji if the two days were combined.
DIA – No. Same condition as SPY.
QQQ – Yes. The last two days have been wit in the same range and tight relative to the 10 day ATR.
IWM – Yes. The same condition as the Q’s
In the prior Focus List I said I’d only consider trading reversals on the long side in the indexes if there was a divergence. We got that in the Q’s and it was a worthy, but not stellar long trade. For Friday, I’d still consider trading reversals on the long side, but I’d be even more cautious if below the reference points mentioned above.
As for trading breakouts, I’d consider long or short under the right Opening Range conditions and so long as the market watch are not diverging. Once exception to this is the condition would be if the market gaps higher, followed by a SPY or IWM breakdown below the floor trader pivot. That’s probably worth following with or without the Q’s in the breakout down.
GOOG’s earnings having been well received and pushing markets higher in the pre-market so there is a good chance we will start the day on a positive note.
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