MBO Issue 55 (Jul 2016) Embrace the Beginning of EU Dissolution
By Lawrence
Content
- Review
- Euro More of the Same
- S&P 500 Triangle Setup Intact
- Gold on Track to Test Its First Important Resistance
- Big Picture Summary
Review
Euro 1.14 confirmed swing top with up channel support broken as expected.
S&P 500 expanding triangle develops just like I projected. No surprises there too.
No melt down move in GLD as 115 support proven too much for the bears. Weekly close above 120 confirmed continuation higher in play.
Overall quiet summer trading with spike volatility caused by Brexit but then everything resume their courses.
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Comments
Thanks LC for the MBO. Regarding your statement “What’s surprising to many is the strong reversal from there going all the way back up to near year high. It is not a surprise for us because I already warned in the special update that a sharp reversal was in the making.”
Unfortunately I was one of the “many” that was surprised by the 120 pt rally in one go from 1980. It seemed unprecedented looking at historical studies as well. I expected a big bounce but I got hurt midway into the rally looking for short setups second half of the week. The low that Monday seemed “poor” or “dirty” as some would call it, and from what I recall from the chat that Tuesday you seemed cautious about it being a strong low as well, saying “do not assume we have swing low for the week yet. Many crash down type situation has this kind of reaction moves” and “sell climax should not be reached until Wed based on custom breadth”. Therefore with the double gap up on Wednesday that’s when I started looking for mostly short setups throughout Friday but that didn’t work out well obviously and was my worst trading days of the year.
I will study the action more closely to avoid making this same mistake in the future. Sorry I just wanted to rant a little and be honest with you. Sometimes it’s good for traders to be humble and talk openly about their losses as well and I’ll take the stand this time. Thanks.
The run back up to at least 1/2 way, 70 pts higher, was completely expected thanks to the over bearish sentiment and VIX smash at every important intraday resistance.
The extra push of the next 30 points was purely well timed news shock to produce a short squeeze. Last 20 pts going into close of last week created the condition for a sharp pullback and we got that already.
One thing to remember is that once a very powerful move is in progress, it is not likely it is going to stop and reverse quickly. We have to wait for the conditions to line up first.
The more chaotic / demanding the market is, the more patience is needed to trade well.
Its good to see more interactive comments – so that members can see other point of views. There are a lot of forums out there but a lot are nonsense. This place is good…. but trading is a very lonely job, it will be good if there is some interactivity.