I have a dream that one day this nation will rise up and live out the true meaning of its creed:
"We hold these truths to be self-evident, that all men are created equal."
– Martin Luther King, Jr. , 1963
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Welcome to the Trading the Line Free Report.
The market powers into the long weekend, closing at the top of the gray channel and above the upper extreme. The gray channel is my proprietary trading channel that describes the market's normal range. The upper and lower extremes (fine red and green lines) are my approximation of Terry Laundry's proprietary Energy channel. Trading at these levels is unusual.
An incredible 2 weeks to start the year – far beyond expectations, so lets take a look and see what's going on.
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As we can see, on 02 January the market gapped up into another S/T Buy Signal at 2686 and took off, quickly erasing all of the indications that a correction or consolidation of any kind was imminent – which was of course the predominant thinking, including mine. This appears to have released an enormous amount of bullish energy as new all time highs beget further new all time highs.
Even the recent echo high on 09 January had little lasting effect as the vacuum created by lack of sellers and most probably a lot of short sellers at the Christmas high quickly propelled the market higher and higher.
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I mentioned in my last report that the rise of the T volume oscillator (to 72) above its previous relative high was another bullish indication and potentially activated the really long cash-build-up line going back to the November and December 2016 highs, but I am still surprised at the absolute lack of corrective action.
In fact we can already see a short cash-build-up occurring since the oscillator high in December which shows that a significant amount of profit-taking is occurring within the context of the market's continual rise.
This means 2 things, that traders are taking profits only to see the market continue higher encouraging them to chase the market higher, and that the market is also leaving a significant amount of traders behind waiting to enter on any future dips as and when that occurs.
This in turn produces 2 distinct effects – a volatile unstable market, and a lot of buyers that will enter on any deep pullback.
Notice that the range has increased dramatically since the summertime, partially in response to the higher price, and I can only assume that this will continue, and that we can therefore look forward to some large (perhaps 2-300 point) swings in both directions in the course of the year ahead.
The T volume oscillator is strongly bullish and suggests that we take the longer projections of the 2 current structures very seriously indeed. That suggests to me that we should see further highs into February, March and April, perhaps even May, as projected by the full extent of the Large T structure (above).
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On the weekly chart we can see that the market has now moved beyond the target trend-line from the 2014-15 peaks and that we may be near to an exhaustion point with the market moving nearly vertically above that line.
This has synchronised with the market's move to the upper extreme of the channel and the gray channel on the daily chart and although we could certainly see the market continue to climb at these levels it would be reasonable to expect some slowing of the rise in price, perhaps even a pullback of some kind.
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In the meantime, the simplicity of my proprietary S/T Signalling System continues to keep us on the correct side of the market, providing a green light for buying (and holding on) at increasingly higher prices, regardless of the temptation to take profits (early).
The S/T Signalling System is not a black box system. It is a rigorous trading method and risk management system that will enable you to understand how to participate in the market without fear or prejudice, because it is derived solely from what the market is doing now.
There are of course many ways to participate in the market using the S/T Signalling System and how you use the system would depend upon you and your own parameters. The system has now been profitable in each of the last 5 years, averaging 369 points / year. Actively managing positions within the framework of the Signalling can produce significantly more and/or reduce risk accordingly.
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 what is coming next and trade with confidence:
For more detailed ongoing analysis of the developments in the S&P500 index on a daily basis, as well as my personal Buy and Sell Signal trigger levels, please Sign up for daily Alerts & Observations. This includes access to the Members Area for an archive of all of my alerts and updates and my Explanatory Notes pdf which gives detailed explanations on all of the concepts being discussed.
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