In last night’s post I indicated that the stock market was due for a sell off, and we sold off this morning for a nice run down. A trader wrote in saying the “predictions are uncanny.”
Anticipation
First off, I am not making predictions. Please don’t think that. As soon as you start trying to predict the market, you will be in deep trouble – at least that is what always happens to me. We are only anticipating what is likely to occur given the market action. That is all I try to do.
Wyckoff’s Principles for a Pullback
Second, it is simply an application of the Wyckoff principles. Wyckoff described what to look for when a market is preparing to pull back. We covered this in the Wyckoff in the Modern Markets tutorials (here is the link, if you are interested: Wyckoff in the Modern Markets Parts 1 & 2)
Trades
The intraday market provided a few nice opportunities to go short today. The first around 8:30 AM Eastern Time as the market began to accelerate down after making lower lows and lower highs after it tested yesterday’s highs in the overnight market.
Another opportunity to short appeared after the US open, and again just before the noon hour began as the market tested the US session morning highs.
The market oozed down for several hours, but never developed strong trend day conditions. As the day wore on we saw shortening of the thrust and some buying come in between 2:30 and 3:30 with a nice spring trade just after 3:30 for a good push into the close.
Bigger Picture
Bigger picture, the market has entered a trading range. You can see this clearly on the Tick Chart. We will watch the market action around the edges of the trading range for the next directional play.
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