We’ve watched the tape gyrate on a slow downward trajectory for several weeks now and a final resolution, to the up – or down – side, continues to evade us. Which I’m sure has been jittering quite a few nerves out there, especially given that many participants are unaware of or unwilling to embrace the reality of distinct market cycles. Which unlike our seasons seem to come and go in fairly unpredictable patterns, much to everyone’s chagrin. However acceptance of a cyclical market is tantamount to survival as a trader, as has been the recognition of and then response to climate variations throughout our evolutionary history.
I feel rather conflicted about the price action over the past month and quite frankly that’s exactly how I should feel and thus act accordingly. Just take a look at a daily E-Mini chart and compare the March contract (ESH7) with the current front month (ESM7) and tell me what you see.
Apparently the odds of seeing any type of resolution before the long Easter holiday weekend are low (what are the odds I will eat my words on that one?). Which gives me an opportunity to dazzle you guys with some rather thrilling implied volatility (IV) charts. So strap yourself in and make sure you do not extend your hands or legs outside the carriage until the ride has come to a full stop.
Things are still looking quite dicey across the board, i.e. volatile and mostly sideways. Which means we’ll have to remain extra cautious with our exposure and keep an objective mindset until we see more directional tape again. So this will be a quick Monday morning warm up with some general perspectives and ideas as to what symbols to watch:
The wave wankers amongst us would probably label the current formation a 1-2-1-2 pattern and I simply call it a corrective inflection point after a major advance in equities. What I mean by that is that the odds are roughly equally balanced right now pointing in both the bullish as well as bearish direction. Relatively small [...]