Monday’s Trade Fits Within Current Analysis – Here’s the Update
The broader indexes performed in line with expectations with the finishing touches put on the initial leg up off of Thursday’s lows being completed early in the session. Yesterday I updated the upside potential and provided Fibonacci resistance levels covering the entire declines, (thus far), off of the post FED highs to last Thursday’s lows. The rallies off the lows have now formed Elliott 5 wave advances, which tells us a great of what we can likely expect for the balance of this week and likely into next week as well. First the DJIA, SPX, and NDX are closely following the same patterns. All three put in 5-wave advances off of Thursday’s lows and are now tracing out the expected A-B-C declines, where waves A and C are declines separated by an intervening rally labeled wave B. Today’s charts show the progress thus far of the rallies, (bounces) and also include the progress of what should ultimately be a smaller intervening decline. Support for the remaining decline should be held between 1944.50 and 1938.25 for the ES, 16805 and 16754 for the YM, and 3984 and 3970 for the NQ.
If these support zones hold expectations would be for an additional 5-wave rally to begin with the most common relationship between the two rallies being that they are equal in length. Thus we can begin to estimate the potential for an additional rally reaching the 1991 area in the ES, 17,185 area for the YM and 4082.75 in the NQ. These levels would be refined as the intervening declines complete and the subsequent rallies begin.
The U.S. dollar also began to retreat after the recent strong rally. Monday saw the Euro gain over 150 pips before drifting back slightly into the close. This provided a strong upward push for gold as well, with the metal $26 off of the overnight lows just above $1183. The treasuries also received another boost from the dollar weakness, which was expected. The extent of the rally, though may be limited to below 140 on the 30-year bond.
The Logical Signals Trade Room is up and running. We have an outstanding group of members that have already begun contributing across the board from trading indicators, patterns and products, to computer software and hardware. Thus we are ready to move on to phase two of membership/subscriptions. Now that a core group has been established we have a few additional spots for other traders that may have an interest. Phase two, though will be somewhat more involved in that prospective members will get a chance to talk in more detail on their trading goals, experiences and expectations with me and possibly other members before deciding to join. At this early stage it is important to continue to steer the room in a direction that favors all of the members. Should you have an interest please check out the updated “Invitation to My Trade Room” under the Trade Room tab and get in contact with me? Presently we have 10 additional spots open before closing this room until next year.
Trading the number remains key to being able to reduce and separate the “noise” from opportunity. This takes knowing and executing a well-defined strategy and allows you to see opportunities amongst the “chaos” and by trusting the mechanics of your strategy, be able to take advantage of them.
Opportunity continues to knock on our doors. While it doesn’t come without risk, risk can be defined and more manageable. Volatility and broad moves are exactly what a day trader desires and being able to respond without questioning is a luxury many are unaware of.
Steer the course and don’t compare yourself to everyone else. You are not they and they are not you. Remember to trust and believe what makes you unique at this moment in time and in this situation and allow others to choose for themselves. Don’t be swallowed up by the chaos and false emotions swirling around. Remember it’s just a number.