Just a quick post today as I've been overdoing it a bit since I returned from vacation and I'm feeling a bit washed out. The trendline setup today looks pretty simple today in any case. As I said yesterday morning, the ES rising channel breach and retest looked bearish unless ES broke back up into the channel and we duly had a down day on SPX. A declining channel has since formed since the high this week and immediate resistance is at the broken 1162.75 level (ES). That has been tested and the declining channel established at the overnight high. If 1162.75 resistance and the declining channel hold today then the outlook is still bearish with declining channel support in the 1125-30 area today. If we see a break up through the declining channel and 1162.75 then the outlook will turn bullish and we might see a significant rally today. Here's the setup on the ES 15min:
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Why I Shorted Where I Shorted
First off, there are already Halloween decorations and pumpkins going on in my neighborhood. Sheesh!
Anyway, just a quick post to wrap the day up……I had a bunch of new items I wanted to short, but I wanted to wait for a decent price. As the market strengthened (briefly!) rather late in the session, I noticed it was approaching the underside of a broken line. This line wasn't quite horizontal, but it was close, and I literally had my finger hovering over the "Execute" button that would unleash about 20 Sell Short orders. Once the price kissed the underside of the line (circled here in green), I clicked it.
On a different screen at the same time was the IWM, which had a somewhat similar line. This only affirmed my belief that this was a meaningful price level.
Of course, nowhere in nature's law is it written that the price couldn't have cut through both lines and exploded higher, but this is a matter of balancing risk with reward. The risk was lower if I could hold out for the retracement to that line, and being a not terribly patient person, this wasn't easy for me. But, in the end, I'm glad I waited, because better entry prices have two wonderful benefits: (a) better profits; (b) lower potential losses!
With just thirteen hours left in this quarter, I am on the edge of my seat with nervousness, I confess. I'll be glad to open up the bar on Friday. It won't be a moment too soon.
Good night.
