Boy, you guys are spanking your mental masturbation gland like a mad monkeys tonight. Will we go up tomorrow…. will we crash… T.K. is short…. but futures are up… I should have scaled out… if we rally – how far are are we going to go…. jeezzz…
Seriously – if you are stressing tonight then you are far too overextended at this late stage of the wave cycle. That is why I scaled out and didn’t hold overnight. Am I going to miss out on a huge drop tomorrow? Maybe. But I’m also not going to get hit by a monster snap back rally – whenever it occurs.
I am NOT saying that you should have not taken those short trades. What I am saying is that if you are sweating tonight then you let greed dictate your actions this afternoon and you are are outside your risk tolerance and are most likely violating your trading system. In which case don’t come crying to Mole – I don’t want to see a single complaint – and I mean that.
I’ll be super quick tonight as Mrs. Evil is waiting with dinner and I might incur the wrath of her pin roller if I let it get cold. As you can see from the chart above I am leaving room for a snap back at this point. But although we are massively oversold it doesn’t mean we cannot keep dropping from here. As a matter of fact – capitulations most often occur in heavily oversold conditions. If we continue downward the wave count changes a tiny bit. I would target either 680 or more likely 660, as that is a strong prior diagonal support line.
If we bounce up tomorrow you guys know the drill – I’m shooting for the 760 territory.
Here’s a zoomed out chart that shows my diagonal support line. It’s been touched seven times before, so i expect it to be observed, at least temporarily.
Here’s something I was working on during the afternoon. I call it Zero Lite and it runs on a 5min chart. It’s a bit wiggly but I want you guys to just look at it and let me know what you think. It appears to me that it depicts intra-day trend changes quite nicely, although there is some increased noise of course. I’ve smoothed it by a factor of 3 for starters – maybe it needs more or maybe it could do with less. Any input/thoughts are welcome.
Got to run – see you guys tomorrow morning bright eyed and rat tailed 🙂