Would You Care to Dance?

//Would You Care to Dance?

Hawk’s Scan Sentry Report October 1

Trading the markets is like dancing with a fickle partner. It’s very important, however, that you let the market lead. If you do not then you will pay… much worse than just getting your toes stepped on.  If you do let the market lead and you pay attention to the subtle clues she gives you as to which direction she is tending, then you can find yourself  the envy of all of the others at the ball, gracefully moving back and forth with the most powerful being there. But remember, YOU MUST LET HER LEAD. If you try to lead she will humiliate you with her wily ways. So how do you read her subtle clues? Well, you need good sensors that telegraph her intentions to you as she herself is deciding to make her move. This is precisely what the study of technical analysis is designed to provide. However,  there is no substitute for an experiential education that enables you to perceive the nuances that separate the actionable signals from the others. When you make mistakes the market mistress will berate you (and your trading account) until you learn to humble yourself enough to perceive her will, not your own hopes and expectations. That is why I often encourage new traders to reassess their analysis frequently, as the markets morph from day to day. There is no way around it, this type of experiential education can be expensive; however, sophisticated technical analysis can help curb the costs significantly.

Right now when I look at the American equities market as portrayed by the Emini-S&P futures contract, I see a pullback in an uptrend. Note how we retraced to the support/resistance level in the mid 1420’s , and how we see a bullish Pullback 23 setting up right at the up trendline. We’ve even got a bullish “Pullback Divergence” developing in the Radar2 Price Leader which also happens to be oversold right now.  We still have a Bull Flag target to achieve as well.  Radar1 Fear/Greed is not as strong as I like it; however I am fine with my bullish outlook until the Radar1 Fear/Greed indicator drops below the previous lows of -25.76 on August 30 one month ago.

Although I am bullish on the market in general, I will let the market mistress lead me where she will. That is why I like to look at both long and short trading possibilities in order to be ready to dance whichever direction she decides to step.  Below are some charts of some of the symbols that I have identified this week for my weekly trading watch list. Each contains a little explanation of the analysis visible on the chart. If you have any questions about the indicators on these charts please follow this link to a legend describing these tools.



(This is a Pullback 123 trade combining a Trend Exhaustion1 signal and a Pullback 23. This is occurring right at support and creating a bullish Pullback Divergence. )


( Another Pullback 123 pattern, this time as a breakout to new highs above the down trendline. )


(This is a bullish Pullback Divergence with Radar2 Price Leader identified by a combination of signals from Trend Exhaustion 1 and Pullback 23)



(A bearish Pullback 23 into the Triple Trender creating a pullback divergence in the down trend.)


(Here we see a Pullback 23 signal at the short-term bearish Triple Trender).

May the trend be with you,


Jan Arps’ Traders’ Toolbox is not an investment advisory service nor a registered investment advisor or broker-dealer and does not purport to tell or suggest which securities customers should buy or sell for themselves. Examples presented on this site are for educational purposes only.  It should not be assumed that the methods, techniques, or indicators presented in these examples will be profitable or that they will not result in losses. There is a high degree of risk in trading.  Readers using this information are solely responsible for their actions and trade at their own risk. Readers should always check with their licensed financial advisor .

2018-01-08T07:39:03+00:00October 1st, 2012|Hawk's Picks|