I hope that you have enjoyed the summer.
The market has continued to rise throughout the summer months with the July highs superceeded by August's assault on 2900.
Although at times there have been warnings of complacency with low put/call ratios and relative weakness evident, each of the declines has generated new highs with the T structures supporting and overlapping each other.
As you can see the summer advance projected some highs at or just after the Labor Day holiday, and the market is currently testing important rising support just below 2900. As the majority of participants get back into the swing of things it would make sense to see some consolidation at these levels or perhaps a bit lower, and prove whether the recent breakout to new all time highs is justified or not.
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Zooming out to a one year chart, below, we can see that once the market had broken the triangular structure and the series of declining angles from the January high it was able to resume its previous trajectory. This is especially evident since the July lows.
The break away move since the July low was accompanied with a strong move up in the T volume oscillator from a stabilisation pattern and this in turn activated a new large T structure projecting highs in August and possibly also into this week.
After projections of major T structures it is usual to see a significant drop in buying power and the market subsequently looks for the price to stabilise at a level where value is perceived. The T volume oscillator is derived from the NYSE advance / decline volumes and is therefore a good representation of the overall flow of buying power within the market as a whole.
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In the weekly chart we can see that the volatile range-bound action of the first 4-5 months of the year eventually gave way to the continuation of the search for new all time highs.
Movement up above the long-term trendline along with the projection for early September highs has apparently triggered some selling as the market looks to stabilise itself again after its recovery to new all time highs
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All in all 2018 continues to be an exciting year bringing with it some excellent opportunity and a range that is far beyond the experience of recent years.
Along with the expansion of automated trading systems, artificial intelligence, a greater use of hedging and volatility products, as price moves higher itself range itself appears to becoming greater, and the greater the range, the greater the opportunity. This is a Brave New World. We should expect it to continue and trade accordingly.
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Regardless of whether the market can sustain its trajectory for higher highs or whether another, perhaps deep, low is ahead of us, the simplicity of the proprietary price based S/T Signalling System continues to keep us on the correct side of the market, as of yesterday providing a timely Cover signal, for now.
If you would like to learn more about using the S/T Signalling System please get in touch.
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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.
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