I wrote about the S&Ps this morning; by the Taylor Technique today had a “sell short setup. On a Sell Short day, we’re looking for some variation of a test or penetration of the previous day’s high, a subsequent selloff, closing lower than the open.  Taylor would have you take the short home, looking for lower action in the following session.

So today we had the first part of a sell short day-a violation of yesterday’s high of 1064.00.  However, after the hysterics of the few hours after the “unenjoyment” report, Spoos spent the rest of the rest of the day in a tight range-the last five hours had a six point range, with much of the session tighter than that.  Note how much of the trade pivoted around the 1064 level.

So where does this leave us for Monday?  Today’s range ended up being the narrowest of the previous seven days, and was also a Doji, so we should look for a breakout move.  The Sell Short signal hasn’t been resolved, nor does the breakout setup negate it.  However, market instability when we get a breakout setup means we should be “directionally agnostic”.  Given the significance of today’s high and low (see my post from earlier today), today’s high and low are points to consider for breakout trades.  For more information on trading breakouts, check out my Breakout Futures Trading eBook here.

Breakout setup for Monday

Breakout setup for Monday

Breakout setup for Monday

Breakout setup for Monday

Red line was the previous day high

Red line was the previous day high

This is a sample of the analysis from my Swing Trader’s Insight advisory service. For information on STI, and to sign up for a free two week trial, visit here.

The information contained here includes information from sources believed to be reliable and accurate, but no guarantee is made as to accuracy, nor do they purport to be complete. Opinions are subject to change without notice. Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.


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