Much Ado About Nothing

As a market analyst – financial blog pimp daddy – or whatever I may aspire to be – it is important to know when to be very explicit and elaborate in my forecasts – and it is equally crucial to know when nothing should be said beyond what has already been offered. Tonight is just such an occasion:

Today’s gyrations have bestowed us with neither a disqualification nor a confirmation of either of the two present scenarios (i.e. green and blue). So we must wait until the market shows us its hand – in particular in light of the blatant program trading action that once again pushed the market towards higher altitudes in the final minutes of the day. Was it a ruse to shake out some of the weaker hands or a precursor of a follow through action tomorrow?

With the data currently available to us it’s impossible to know for sure, and as traders we have to reconcile ourselves with the fact that sometimes we simply do not know. Inexperienced traders will often fall in the psychological trap of settling for an emotionally convenient answer, one that in most cases is simply based on talking their own book. There is nothing wrong with not knowing – as strangely as this may sound – as those are the times when we simply do nothing.

Again, we can learn from Sun Tzu: “Strike when victory is assured”. Reflect upon that before tomorrow’s session.

As a side note – I find it interesting that the long spike today touched my diagonal resistance line and immediately bounced back (not shown on chart for some reason – not sure why). I am sure we’ll know soon enough – I still have not abandoned the short side also for other reasons – the stark contrast between the slightly negative breadth ratio (NDX and SPX) and the huge spike in the Tick (+1380) is only one among many.

But if the past few months have taught me anything then it’s that I would be foolish to put my eggs into the bearish bandwagon too early. Let’s wait and see – the range is fairly condensed at this point and a final resolution should present itself by Wednesday at the latest (let’s hope).

Cheers,

Mole