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Looks like the 49 area has stopped it....if you're not in ....maybe a retrace to 47.5 and look around there for something....I did get a pinbar off 749 but still have 751.8 up there so just keep your eyes on it if you jump in on a retrace
I'm showing 744.2 now as a potential spot but it looks pretty weak and I don't like the idea of chasing but will watch what happens there if it gets hit soon...if it keeps dropping (to 740 lets say) forget about it.....
stay away from this....it might work but now showing it would stall at 742.8 and turn into a yo-yo probably....maybe not but it's coming into lunch and why take the chance....
Well if any of you were watching you saw that 744.2 spot hold and after lunch could have jumped on it...I did post something in the chat for a target but you all probably are out playing golf or something and I'm talking to myself anyway....Have a good weekend.
Even though it is tempting to think that some of the best trading available is by “trading the range” up and down, this is really more of a myth unless done for a very small profit and probably in truth a loss and why trade for a loss?
Right now it’s nearly irrelevant since there is no real range to “play” and one of the very pitfalls around this myth, but it may feel like there’s a range with the recent Dead Cat Bounce after two months of actual range trading. Before looking at the charts as to why there is not a good range to trade right now, though, let’s turn to why it’s not a good idea even when there is some sort of range by considering what is described about range trading in Technical Analysis and one of the primary texts used to study for the CMT.
“Trading within a range is difficult. Although many books suggest it as a strategy, it is almost impossible for the nonprofessional to profit through range trading.”
This book then goes on to describe why it is so tough to trade the range for a profit including the challenges of identifying a range that can be traded as it is relevant, the fact that operating costs typically eat into profits and the difficulty of identifying a decent stop-loss.
“Thus, most traders stay away from trading within a trading range and instead wait for the inevitable breakout and the beginning of a trend.”
Clearly the pitfalls of “trading the range” are demonstrated above while the breaking of the directionless sideways trend into a near-term downtrend offered, and probably will continue to offer, decent profits from the short side or at least defense from the sidelines.
The reason for this topic tonight, though, is shown by that Descending Trend Channel and the reason it feels like there is a range to trade right now and this is worth noting only because this is the only kind of range trading espoused by Technical Analysis only the espousal says pick a side.
Put otherwise, choose to trade the Descending Trend Channel from one side – long or short – and why would anyone in his or her right mind choose to play a downtrend by trading its 3-5% pops when there is a generous downtrend that may just keep giving and giving? Such a sentiment is expressed a bit more formally by the authors of Technical Analysis as follows.
“The one exception to range trading is channel trading. A channel is a trading range tipped at any angle such that it trends upward or downward. One can trade these channels back and forth but only in the direction of the channel trend.”
Returning to my less scholarly language, stick with the trend and don’t try to be a hero by scalping 3-5% – have personally learned through painful past experience that this does not work for long even if a swing or two is captured – in the context of a trend that could take the S&P down by 40% ultimately.
After all, the S&P is showing a severe near-term downtrend, even in its monthly chart, that comes in the context of a reversing intermediate-term uptrend that is at the top of a sideways trend with not one bullish aspect to be found in that description including some sort of 3%+ pop in the days ahead that may not come at all.
Overall, then, the perils of “trading the range” really are irrelevant right now with no range to trade unless you stick with the trend of the S&P’s new but probably long-lived Descending Trend Channel.
