Oh, mountain of our eyes, what do you see?
The girl with the omen dice, bowing to thee
Mortal soldiers clear the path, shake the omen tree
Oh, mountain of our eyes, oh plea
Oh, hear our plea
Patti Smith, Fuji-San, 2012
(Songwriters: Leonard J Kaye / Patti Smith)
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Another day of two halves and a recurring theme, a strong recovery to 2653 triggering an S/T Buy Signal at 2633, and an afternoon collapse to close back at the low of the day at 2613.
The volatility refuses to allow price to stabilise, and the market's current logic, if it aint going any higher it must be going down continues. But for how long I wonder?
The market is making a massive consolidation pattern – laying railroad tracks even, and this is winding up an increasingly large amount of energy – like a coiled spring – which will undoubtably explode one way or the other in a significant trend that will probably surprise most everybody.
The logic of railroad tracks is that they often break to the downside and this is therefore a bit of a warning because this consolidation could well be preparation for a waterfall decline.
What would be the least expected outcome? A recovery to the all time high or another 10% decline?
In the meantime, the Osc oscillator looks close to a Buy signal and the double bottom structure is still intact.
The flip side to the negativity is that at some point the market will discount all of the negativity – effectively pricing it in – and find a level that is acceptable to move higher from.
Futures are up – significantly – and so another attempt at the recent highs is on the cards for today.
Be prepared for whatever is coming next, and trade with confidence:
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Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.