I recently wrote about the dire predictions for the market as the focus of the financial stations and trading websites turned toward the “bearish head and shoulders” pattern forming on the S&P. This pattern turned out to be a deception and the market took off like a rocket off the 200 TANKS and up past the channel we discussed when we were looking at either a missile launch or bunker building from a recent range. We knew one or the other would take place with great force and energy.
A FUNNY THING HAPPENED ON THE WAY TO THE MARKET TODAY
So here we are at the highs of the year during the summer doldrums post head and shoulders. Go figure. Anything will and often happens in the market. We just have to learn from these events and move on. But traders can and do suffer from short term memory loss.
Here is what I am hearing now: a “reverse head and shoulders” on the WEEKLY S&P chart. Let’s take a look:
The move off the shoulder is a direct result of the two week advance off the DAILY 200 TANKS. Why did anyone not see this then? This could be a pattern that eventually works as we roll over to test the 50/21 TANKS on the WEEKLY and roar higher again, or we just continue to take off from here. Please note: the 50 TANKS on the WEEKLY is the same as the 50 TANKS on the DAILY (as of this writing 924). Very strong support from two time frames and may provide the best pullback entry. In the meantime, it also gives plenty of room to trade to the downside.
TWO WAYS TO TRADE A MARKET
But wait, before we get too carried away here looking at a bullish “reverse head and shoulders” on the WEEKLY and the strong support on the DAILY, there is another way to look at this market besides just a temporary move back to the 50 TANKS.
The very rarely seen BEARISH MEGAPHONE PATTERN:
So many conflicting charts, recently busted patterns, multiple time frames with divergent possibilities! What is a trader to do? Here is my answer:
Trade according to your high probability rules and the time frame you are most comfortable with. If your assessment of the market is proven correct then take your money when given to you. If you are incorrect, then admit it, take responsibility for it, and wait for your next opportunity. Just do not get so stubborn about being right. Trading is not about being right! Focus instead on making money, no matter the eventual outcome of this pattern or that pattern!
Simple when you accept it, complicated when you fight it!
