Alright, let’s talk about what exactly happened yesterday when equities effectively fell off the plate mid session after which the plunge protection quickly stepped to push the tape back into politically correct levels. Of course I’m kidding: If you’re looking for conspiracy theories, innuendo, or rumors then please move along. We only concern ourselves with technical evidence and bad humor here at Evil Speculator.
Catching entries and holding them for more than a day or two has been increasingly difficult lately, in particular since the beginning of June. Not only are we in a seasonally bearish period during what still continues to be a late stage bull market (until proven wrong), but intra-day volatility also appears to be in a cycle of expansion. Originally this post was supposed to feature an early summer lottery ticket but upon further consideration I had to (once again – yes) err on the cautious side. Call me a chicken but I think a more conservative approach has kept us out of a lot of trouble recently.
Limbo tape – it’s what I call the annoying volatile sideways churn devoid of technical context we’ve been experiencing across the board since the beginning of June which has pushed retail into an early summer identity crisis. You may recall that it’s not the first time I’m talking about limbo tape and it probably won’t be the last. Now this may be a good time to once more remind everyone that we as retail traders have one principal advantage over fund managers or institutional participants such as trade desks or system operators.
It’s relatively quiet morning thus far which gives us time for another exercise in tape reading. This time we are going to take a more in depth look at equities and cover a few tell tale signs that tell us if and when the market has transitioned into another distinct phase. Let’s start with the Zero: