SEEN THIS RE RUN BEFORE
One sharp day down now back up we go. The beauty of this is if we go on to cascade higher, is the way they broke the trend line just with one close first. This is a classic trap pattern, where they took the price just far enough to trap a few bears who were aggressively looking to short the market. If you look at the Strong Trend comment with the long term momentum line, you can see the main reason I exited that VXX trade quickly. With the VXX the trend is as equally strong on the downside as it is here on the upside. As a result, when I got that sharp move against the trend I took the money. I am not trying to be hero in front of this stampede. For all I know we are going to new all time highs before this is over, and if you think that is crazy you might want to build more flexibility into your thinking. That is not a prediction on my part. I still feel this is a bubble and even if it is not, extremely overbought by many measures. However I consider all things and try to be flexible. I have even considered that Gold is not the bubble that I have thought. You just can't get too stuck in any one view, what if you are wrong? You need to be able to adapt on the fly to trade well.
I respect trends, and so far this is just not one to get overly exuberant about trying to play reversals other than short term trades. In terms of short term trades, there is something brewing here now. If you notice, there is a 3 point divergence that has setup on the trend oscillator and that same oscillator is showing a downtrend. As a result, I am looking for a short entry on this move up here. If we just go straight up and blow out the highs and keep going, some of this will "undo" itself. In other words, this condition will work itself off and the trade would be nullified. What I would ideally like to see is a new high that gets reversed the very next day, where I would be a player at the low of that new high day. Second on the list would be a lower right peak, shy of the new high. I like traps better so that is why I am rooting for the first one.
The one day wonder has still not been conclusively voted on by the jury. If all we do is bounce as far as what we have so far, the one day wonder may be followed by another one. If we just go up here and take off, I do not mind missing the run because I trade patterns in price and momentum, and long patterns are just not there at the moment in my playbook.
Below is the British Pound trade I exited last night. I sensed potential problems with this due to the rising long term momentum line crossing up out of OS territory. I can't display that line do to current technical problems with my Genesis software. The one negative with Genesis is the program is very unstable with live data, and it just blew up on me which happens a couple times a day typically. As a result even though the weekly trends are still down, not everything was speaking the same language. There were conflicts between short and long signals. Once I need an interpreter, I don't bother hiring one I leave the meeting. This meeting I left where indicated by the arrow and took some decent profits. I had 7 contracts here so about $7300.
Let's hope for a good short setup in the next day or two in the indexes.