Entering The Gap: Two Scenarios
Anybody good at pong?
Summary and Review:
So the AI has been working very well this last month with my account up over 100% since the bottom in June but right now we're really gonna be putting it to the test. The array is showing repeated Turning Points for the next two weekly sessions and also Monday the 12th and Tuesday the 13th. To help illustrate the situation I have every reversal and turning point drawn right now to give a birds eye view.
FYI, here is the Weekly comments it's generated:
"TEMP HIGH - New Highs Likely"
Energy models have flipped positive and are suggesting a "very strong rally". It's like nobody has noticed we made a higher low.
Also we closed with a bullish engulfing candle and a strong one at that; Generally closing above the body of the previous weekly candle is a good sign for bulls. Go grab an indicator that shows them after a downtrend and look at how effective they are. These are about as good a reversal indicator you can get. The only think I dislike is the low volume. But again, that's what stops are for.
No doubt we'll be testing resistance.
Bird's Eye View:
We have two main factors to deal with right now:
1) We're within a very clear trading range (nearly 30% on leveraged ETFs!). Those clusters of daily reversals I call a "briar patch": Say maybe you're hiking: you don't wanna go through there. In trading terms they act as major levels of support and resistance. And we have two of em. Making a "gap".
"Reversal Gaps
The larger the percentage gap between two active reversal points (that is, the less clusters), the
less energy it takes to move from the one reversal point to the next, increasing the likelihood of
such a move once the first reversal point is breached."
and elsewhere...
"A Reversal Gap in the void between two reversal points. Whenever large gaps from between reversal points, sharp swings become possible as the market moves from one side of the GAP to the other leading to a higher degree of panic. When reversal points are evenly dispersed, there are greater number of support and resistance levels to penetrate. This requires more energy within the system to create a panic situation. But when Reversals are clustered together in particular areas leaving gaps between them, then price movement can become much more abrupt."
You get the idea. So what I'm thinking is it's highly likely we test 318.00 and ricochet off of it. Or the rally just fails and we head back to the lows. I doubt it though.
2) We have a Cycle inversion as well. Just as a reminder:
"Cycle Inversion
Normally each turning point produces the opposite of the previous. However, a Cycle Inversion takes place most often on a breakout or a break down in a market. That means that instead of the opposite, when two turning points both produce the same event, a high or a low, caution is warranted for you may see a very strong movement."
And we have a cycle inversion in play probably early next week 12th and 13th. This can mean we rip up like nobody's business. We are for sure in short squeeze territory. The put volume is ridiculous right now. The monthlies are down 70%. Go look up this put right now if you don't believe me: TSLA221021P00203330
Bears are getting killed.
Plan of attack: Follow the price action
Scenario A)
Where:
- Common sense suggests some amount of profit taking. I won't take it seriously until we cross 50% of the previous day.
- If we open above 307.37 then that will become support.
- Turnaround-Tuesday means we will have a freakout. I think it could spur a squeeze.
- If we chop around I'm going to wait for the motherbar (that's just a bar that engulfs a price range to it's right) to break. The 50% rule on the 4 hour is good for positions/stops imo.
- If we reverse I plan to ADD. I regard all retracements as an add until we test the reversal. If I stop out I stop out.
- If we just gap up I will add at the open: That's the smell of burning fur.
- My stop is set for break even right now. I don't plan to take profit yet.
When:
- Monday 12th - Wednesday 14th.
- The Week of September 19th is STILL my real target.
- A crash in October is possible.
- The week of November 21 is a major target.
(Alternate) Scenario B) :
- The weekly back to back turning points make it possible that we simply spend a month in a distribution chop until October where we ricochet up and down over and over. The month of June and July are examples.
- The next week could be a blood red candle straight down. Look at the week of July 27. If that happens I'll be waiting for a reversal. That has not shown up in the price action yet though.
- In the event that this happens simply use breakouts of hourly to 4 hour candles and swing up and down over 3-4 day intervals. Set stops to 50% or base of the candle. Take profit at the top of bottom of the previous weekly candle.
- DO NOT TRADE INSIDE CANDLES. PERIOD.
- I'll update the idea as the computer does (actually I might make an entirely new idea).
- Again, look at June - July weekly candles to get what a textbook example of this is.
- We have almost a 30% GAP to play with if this happens. Absolutely massive chances for profit in this event.
Addendum: There is no rational basis to open a short position right now. We are mid way between ranges. The VIX is tanking. Wait until we hit hard support to even think about it. 318.00 minimum imo.
In closing I predict this week will be a spinning top, or it will be an ugly candle with lots of wick. Size light and only into retracements.
That's it. Live long and prosper.
Summary and Review:
So the AI has been working very well this last month with my account up over 100% since the bottom in June but right now we're really gonna be putting it to the test. The array is showing repeated Turning Points for the next two weekly sessions and also Monday the 12th and Tuesday the 13th. To help illustrate the situation I have every reversal and turning point drawn right now to give a birds eye view.
FYI, here is the Weekly comments it's generated:
"TEMP HIGH - New Highs Likely"
Energy models have flipped positive and are suggesting a "very strong rally". It's like nobody has noticed we made a higher low.
Also we closed with a bullish engulfing candle and a strong one at that; Generally closing above the body of the previous weekly candle is a good sign for bulls. Go grab an indicator that shows them after a downtrend and look at how effective they are. These are about as good a reversal indicator you can get. The only think I dislike is the low volume. But again, that's what stops are for.
No doubt we'll be testing resistance.
Bird's Eye View:
We have two main factors to deal with right now:
1) We're within a very clear trading range (nearly 30% on leveraged ETFs!). Those clusters of daily reversals I call a "briar patch": Say maybe you're hiking: you don't wanna go through there. In trading terms they act as major levels of support and resistance. And we have two of em. Making a "gap".
"Reversal Gaps
The larger the percentage gap between two active reversal points (that is, the less clusters), the
less energy it takes to move from the one reversal point to the next, increasing the likelihood of
such a move once the first reversal point is breached."
and elsewhere...
"A Reversal Gap in the void between two reversal points. Whenever large gaps from between reversal points, sharp swings become possible as the market moves from one side of the GAP to the other leading to a higher degree of panic. When reversal points are evenly dispersed, there are greater number of support and resistance levels to penetrate. This requires more energy within the system to create a panic situation. But when Reversals are clustered together in particular areas leaving gaps between them, then price movement can become much more abrupt."
You get the idea. So what I'm thinking is it's highly likely we test 318.00 and ricochet off of it. Or the rally just fails and we head back to the lows. I doubt it though.
2) We have a Cycle inversion as well. Just as a reminder:
"Cycle Inversion
Normally each turning point produces the opposite of the previous. However, a Cycle Inversion takes place most often on a breakout or a break down in a market. That means that instead of the opposite, when two turning points both produce the same event, a high or a low, caution is warranted for you may see a very strong movement."
And we have a cycle inversion in play probably early next week 12th and 13th. This can mean we rip up like nobody's business. We are for sure in short squeeze territory. The put volume is ridiculous right now. The monthlies are down 70%. Go look up this put right now if you don't believe me: TSLA221021P00203330
Bears are getting killed.
Plan of attack: Follow the price action
Scenario A)
Where:
- Common sense suggests some amount of profit taking. I won't take it seriously until we cross 50% of the previous day.
- If we open above 307.37 then that will become support.
- Turnaround-Tuesday means we will have a freakout. I think it could spur a squeeze.
- If we chop around I'm going to wait for the motherbar (that's just a bar that engulfs a price range to it's right) to break. The 50% rule on the 4 hour is good for positions/stops imo.
- If we reverse I plan to ADD. I regard all retracements as an add until we test the reversal. If I stop out I stop out.
- If we just gap up I will add at the open: That's the smell of burning fur.
- My stop is set for break even right now. I don't plan to take profit yet.
When:
- Monday 12th - Wednesday 14th.
- The Week of September 19th is STILL my real target.
- A crash in October is possible.
- The week of November 21 is a major target.
(Alternate) Scenario B) :
- The weekly back to back turning points make it possible that we simply spend a month in a distribution chop until October where we ricochet up and down over and over. The month of June and July are examples.
- The next week could be a blood red candle straight down. Look at the week of July 27. If that happens I'll be waiting for a reversal. That has not shown up in the price action yet though.
- In the event that this happens simply use breakouts of hourly to 4 hour candles and swing up and down over 3-4 day intervals. Set stops to 50% or base of the candle. Take profit at the top of bottom of the previous weekly candle.
- DO NOT TRADE INSIDE CANDLES. PERIOD.
- I'll update the idea as the computer does (actually I might make an entirely new idea).
- Again, look at June - July weekly candles to get what a textbook example of this is.
- We have almost a 30% GAP to play with if this happens. Absolutely massive chances for profit in this event.
Addendum: There is no rational basis to open a short position right now. We are mid way between ranges. The VIX is tanking. Wait until we hit hard support to even think about it. 318.00 minimum imo.
In closing I predict this week will be a spinning top, or it will be an ugly candle with lots of wick. Size light and only into retracements.
That's it. Live long and prosper.
ملاحظة
And cue the corrections lol. I left one bearish reversal off at 298.3. I consider this support for now.ملاحظة
We're gapping up today. I'll be adding at market open.ملاحظة
Added heavily at market open. We have blue sky all the way to the target.ملاحظة
Okay today went really good and account is up 8% so I'm locking in profit TQQQ 30.87 from 28.2 average. Today would have been really good for day trading too with those ATR swings. I plan to reenter pre-market. We formed a bullish pennant today that has sadly broken out after close but I figured trading Mondays open would be enough risk what with a direction change and CPI tomorrow. Rally still seems to be in effect. I don't think the resistance at 315 is as serious as a lot of commentators are making it out to be. However we'll know by tomorrow open.ملاحظة
So today is a turning point and tomorrow is a panic cycle. I would be willing to day trade this especially if we hit the reversal. But I suspect we could have at least a pullback after a 4 day run.ملاحظة
Glad I took profit hahaملاحظة
Okay so as expected due to the public missapprhension of inflation/interest rates we're having our Turnaround Tuesday scenario. Now our target still is next week on the 21st but this could point to a low OR a high at this point. We also have generated 2 Bearish reversals since this post which are at 299.00 and 290.7. Our alternative scenario seems to be in effect. So 4 hour candles long or short as appropriate at either briar patch would be prudent.My plan was to scalp the premarket by bracketing the morning range with TQQQ and SQQQ limit orders hedging for a net neutral position. But I had the worst sleep in a long time due to what I'm guessing is a herxheimer reaction and decided to sit on my cash. Too bad. Would have worked nicely imo.
ملاحظة
So obviously we're scenario B. Our target is 3500 on the spy... yeah. So I'm currently short for the 50% week and will add as we go down.
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