|At 10am: Bulls open up can of Whoopass on shorts|
In my last post, I mentioned that making predictions is dangerous. And six hours later -- my point is proven.
Because let's face it, the only predictions anyone was making is for more pain. And then the shorts had their faces ripped off.
10am was the key time and it was very clear on the 15 minute chart something new was happening. /gc had already broken its 15 min trendline two days ago and /6e had done so on Friday. So it's not like this was out of the blue. In fact, the market was all but giving alert traders a heads up that The Snapper was coming.
With all sectors green, leaders leading, and European stocks doing fine, one could safely assume today was going to be a trend up day. This assumption would have been made around 10:15 am. But even if it took you until 11 am to figure it out... one could have still profited from it.
There is a simple strategy to playing trend up days. The hardest part is recognizing it's on. But after that, you can usually buy breakouts from all pullbacks, all day. So you might have caught the first pullback long for 60 ticks and possibly a second one for 20 more.
Or maybe you missed it -- maybe you were frozen.
However, the incorrect thing to do today was to try to short. No doubt many traders tried to short this market -- after all... they were locked into their predictions and after all... the market is going down.
But the charts do not have opinions and they don't care about yours. A 15-minute trendline break with strong Market Signals is extremely significant. See what happened to /gc and /6e two days after crossing their trendlines.
Now, one could argue volume was very light and so forth but there was no way anyone should have been thinking about fading today. Hopefully many of you did well. For those that were leaning long, it was probably a wonderful day. But of course, those holding longs for the past week are still probably deeply underwater.
But as traders, we try to look a few minutes or hours ahead. We don't predict or hope or pray. We follow charts, we observe, we execute a plan, we get a smoothie. (Or for some, perhaps a beer.)
Congrats if you had a good day today.
So will everyone now be predicting a rally?
I don't know and I don't care.