*updated @ 3:45 pm to clarify a very important point in the closing paragraphs right after the Jesse Livermore quote…
I told many people over the weekend that how the market opened Sunday night/Monday morning would tell us much about the pros plans. Remember, they can e-a-s-i-l-y stop this at any time by simply buying the overnight futures. The best place to kick off any premeditated move for the pros is on the weekly open on Sunday night. All the best moves typically happen there, so keep that in mind for the future. FYI: another favorite spot to play pro games is after a holiday market closure.
I just want to say this one more time and then I will let it rest. They are doing all of this ON PURPOSE! This market has been FORCED lower with the Fake News being used as a bludgeon for maximum effect. Opening gaps almost always indicate the pro’s intent. The market doesn’t simply move…but rather it IS MOVED. Never forget that.
So, what exactly did they accomplish with last night’s lock limit down antics? It is simple. They clearly wanted the stops underneath Friday’s lows. So, now we just need to watch the previous day’s low as our new line in the sand for reversal purposes. Bulls and bears alike should be very interested in that line. Many bears now have some serious profits rolled-up on paper. Now, ask yourself what happens to those profits if they suddenly decide to close the markets in an ongoing pattern of forced over-reaction (all intentional) and incessant fear-mongering through the Fake News. Hmmm.
Friday is Quadruple Witching across all of the options markets. That is the day when ALL of the March contracts expire. Unlike stock holders, who can simply elect to weather the storm and wait for the inevitable rebound that will take hold after the pros have accomplished their objectives for this all-out assault on the American economy, options players will see finality this week–one way or the other. So remember, today’s predator is tomorrow’s prey in the market. Think carefully about not getting too greedy folks. For bears, it really doesn’t get much better than this–but the pros ALWAYS eventually turn on the bears who linger too long–and when it happens you likely won’t be able to get your buy-to-cover order filled at your stops once the market flips. That’s they way the pros always roll.
The screen capture above shows the S&P 500 Futures, as I type…
The short-term timeframe is in play and that is what it is all about in this current market. The arrows on the screen capture above from: https://stopsandtargets.com/members/futures/es.html show the current short-term range, which is between 2380 and 2697.25. That short-term range changes every day and it equals the previous trading day’s low and high. Simple. Are you with me so far?
Those are the only two numbers that matter in the current BEAR 10 configuration. Period!
Why, you might ask, do I say that? …The definition of a bearish trend is: a sequence of lower highs and lower lows. The current bearish trend cannot be reversed until we eventually see a close that crosses ABOVE the previous lower high.
Okay, pause and let that previous paragraph sink in.
That takes care of the importance of the range high–so why do I say the range low is also important? …because the counter-trend speculator stops are congregated just underneath. You see, the very disciplined knife catchers (I know, that’s an oxymoron) will continually take probing shots on the long side hoping to find a bottom and they will almost ALL set their initial protective stops underneath the recent low, to limit risk. The pros KNOW that and so will continue to dip down and grab those all-too-easy sell orders (when stops are triggered) until the supply dries up.
Eventually, the bottom is going to come after a counter-trend buy signal is generated when the previous bar’s stops have been taken and then price rallies back up inside of the range. The pros will decide when they are ready to switch sides–but they likely won’t do that until the buying dries up near the range bottom.
It’s okay for bears to take partials at the bottom targets (buyers) and although eventually some bulls will be rewarded when the market eventually rallies–the odds are very low on these counter-trend entires until/unless the buying volume dries up. Ask all of the dejected knife catchers who bought in Friday and then set their stops under the Friday low. See how that works”
Remember, for the pro’s trades to work they MUST entice large numbers of traders to take the opposite side from theirs. When the bottom comes it will be at maximum pessimism in the Fake News cycle. Watch for it… and watch those short-term trading range numbers very carefully in the coming days.
Bulls always want to catch the bottom on these things and it FEELS good to try to enter on a push down–but the smarter way to trade is to always run with the trend and to leave the counter-trend stuff alone–especially in fully bearish (and fully bullish) markets. For best odds, let the pros FIRST set the direction and THEN try to get the momentum winds at your back on your own entires.
The pros intentionally pushed this over the edge way up higher to flip all trends down–and now I am just starting to sense the inevitable manufactured fear crescendoing. Careful here, my bear friends… but also be careful my bullish knife-catching friends.
The first eighth and the last eighth are ALWAYS the most expensive!
Those of you old-timers that have been around since the pre-decimialization of the markets know exactly what I mean with that last Jesse Livermore quote.
The most expensive first eighth for bulls is a counter-trend long entry below the range bottom in a trending bear market–and the most expensive first eighth for bears is on a counter-trend short entry above the range top in a trending bull market.
The smarter way, in my opinion, to establish new entries is as follows: The best long entry for bulls is very often at a breakout ABOVE the range top in a trending reversal FROM a bear market to a new bull market–and the best initial short entry for bears comes on a breakout BELOW the range bottom in a trending reversal FROM a bull market to a new bear market.
Don’t believe me? Check out the Stops and Targets trend start net change columns on the summary tab screen capture above. Bears have racked up massive short trade gains of -22%, -25%, and -17% respectively for the last long-term, intermediate, and short-term signals!
Remember, the short-term range changes after the close every day, so those numbers will be different tomorrow–but the exact same advice is ALWAYS applicable. Bulls and bears should BOTH watch that short-term stop/reverse line very carefully during this BEAR 10 market configuration!
Caveat emptor as we navigate Quadruple Witching arriving at week’s end.