Hello all... I am waiting out this consolidation cycle and won't be shorting anything until mid/late week. Short term trend strength is just too high to capture much downside shorting resistance. On the 1/3rd and Half Session charts it's running at 1.7-1.8.
I should not be countering until we drop down to around 1.25... The psychology of the long side investors and speculators in the market is highly reinforced by these higher prices reducing volatility way down...
Whats interesting is the 2007 top was set with a monthly uptrend strength of 1.1, and the .com bubble bear market started at a uptrend strength of 0.75. Eg, that was the strength at the last swing high before the collapse.
The broad market monthly is running at 1.4, and the NASDAQ monthly is 1.6...
Going to be a while until we have a true bear market, unless the NAS goes upside parabolic like the end of the .com bubble.
This channel breakout triggered by that Japanese QE and their pension fund moving 300Bil into equities is an EXTREMELY rare event. There is only two other times in the last couple years where an upside breakout of channel in a strong uptrend like this has occurred.
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Not wise to short anything until price starts trading back inside channel, or bullish sentiment gets extreme.
I was just glancing at TT's thread, and people were talking about the low volatility... Knowing why volatility changes is more important than looking at the levels.
Volatility generally lowers for one very simple reason...
When prices are going up fast, and they are high... It makes investors and long side speculators very comfortable. They do not scare easily and are highly confident in their positions. Generally the financial media switches to more positive headlines during market rallies which helps reinforce investor confidence. People look for positive rationalizations and positive rationalizations sell in these times. The media just goes with the flow! There is nothing abnormal about it.
Volatility will start to ramp up a bit once momentum burns away next week or so. Depends upon the way things set up for the pullback.