Some are asking why I am advising caution at every turn. Well, although some are in the business of absolute forecasting, I cannot at all say that I am 100 percent sure that markets are in a bear or bull market. What I know is weighing the risk and probabilities which favour our trades. By all means, I encourage you to do your own analysis and follow your trading rules. I cannot say that mine is the perfect system, but I do know it is a safe one.
The overall sentiment is still bearish but this up move is counter acting the sentiment causing a imbalance. This is not what I call a safe trade even if we have a rally like the one that happened back in late Sept - early Oct. Yesterdays mention of a diagonal triangle can now be considered a candidate for a pattern formation. If the intra-day continues the uptrend then we should look for more impulsive behaviour from prices. Otherwise if we get an OS reading in the signal I would initiate my short again.
SEN: Bearish
ST: UP
PA: NA
Note: I mentioned yesterday also that we should look for a pull back pattern, and based on today's pullback, it seems that a 3 wave pattern has formed. This is a suggestion that we err on the side of bullish move tomorrow in a bearish market.
If you do not understand my reasoning with my words, I am merely stating that risk of acceleration or impulsive moves usually occur within its trend. Therefore even if we are bullish, we should be better off planning for a bearish trade when the signals have turned to take advantage of accelerations and impulsive formations. Trading all ups and downs is just lunacy.. Stress is more likely the end result regardless if you make money or not.
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