Probability Spectra

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This is an important week on equities with likely highs coming on SPX, NDX & maybe RUT too. This high will likely last several months. There are couple of questions that I am still getting regularly that I’d like to address at the start of this week.

How certain are we (Stan & I) that our scenario will deliver here? We are not certain at all, because there is precious little certainty in the universe and none at all in the markets. We have a high level of confidence, within the obvious constraint of the reality that we are forecasting with math rather than magic. Our working assumption is that certainty in market forecasting is less common than unicorns, and that analysts offering certainty are either charlatans or delusional. On planet Earth everything is on a spectrum of possibilities.

How bearish are we? I would make an important distinction here in that we lean bearish when we think the odds favor the downside, and we lean bullish when we think the odds favor the upside. As the market goes both ways we switch sides very regularly. We don’t regard trading or analysis as a team sport and suggest that anyone feeling a need to support a team look at baseball or football as an alternative where taking sides is cheap. Picking teams in trading is pointless and can be VERY expensive.

SPX getting close to the ATH retest. SPX daily chart:

170203 SPX Daily

RUT needs to break flag resistance, currently 1383 area to open up an ATH retest there. RUT daily chart:

170204 RUT Daily

A 60min sell signal fixed on ES overnight and a small double bottom broke down with a target in the 2280.25 area. Important support at the weekly pivot at 2282.75. ES Mar 60min chart:

170206 AM ES Mar 60min

NQ is testing the rising wedge support I marked in an hour before the open. No sell signal. NQ Mar 60min chart:

170206 AM NQ Mar 60min

Another 60min sell signal fixed on TF overnight. A small double top has broken down with a target just above the weekly pivot 1365.30. This is a compelling setup to see a test of WP this morning. TF Mar 60min chart:

170206 AM TF Mar 60min

Stan and I did our monthly public Chart Chat at yesterday. If you missed that you can see the recording on this page here. One thing you may not be aware of is that we also post a Weekly Call with a couple of promising trade setups every Sunday. We have been doing this for a few months now, it’s free to all, and so far the track record has been little short of amazing. Worth keeping an eye on. This week’s Weekly Call is here and if you follow Stan’s twitter, with the link to that near the top of the page, you can see these as soon as they are posted every Sunday.

This should be an interesting week 🙂