I actually have not lost a single trade this week. A couple basically scratched, and two performed decent. I have a max position hold time of 3-5 bars from the setup candle.

I have only been looking for shorts at the resistance area. This rally is very odd in that each day we seem to reach the same resistance zone except for that one day when the japan news surprised the market.



I am pretty strict when it comes to counter setups. Market must be near or higher than the first resistance area, and there must be a short timeframe setup. (5m/15m)

The best setup Monday would be a buy setup around 2016 based upon the cash. However, you guys can have it... I will wait to short the next move toward new highs if the market dips.

I guess you could say I am kinda a permabear, but I am a smart permabear.

I know were in a rally, and I know we have no confirmed momentum loss, so I only short when the market is highly overextended to the upside to the degree it will snap back to short term mean.

Any shorts positioned at even three day average prices still have a 99% probability of going deep underwater over a few days.


I was kinda hoping for the jobs report to catalyze a big pop in the market this morning out of the gate so the market would get pushed far into the elastic zone (Resistance) to provide a great shorting opportunity, but that didn't happen.

"Any shorts positioned at even three day average prices still have a 99% probability of going deep underwater over a few days."

Let me clarify this...

Let us look at prices in relation to six day mean... Using a ten period statistical analysis tool. Prices are maintaining a 100% probability of touching mean + half a range. Over the last ten days, not a single day has failed to at least touch mean or mean + 0.5.



Momentum markets and rallies usually do not suddenly have a major change without some unexpected news. We should see the same type of transition as June/July or September to a weaker market. Two weeks out the probability of prices touching above/below mean should be pretty balanced.

However, here is the powerful thing... If you really know your stuff, you can still find short setups because people will always get scared and take profits. It doesn't matter if the rally isn't over, people don't know that!

Now, if you were to ask me if I would advise holding a short position for more than a few months...

It's not a good idea, yet... The S&P is rising at 22 points/month on average, with a average range of 85 points. However, based upon a weakening momentum curve, 20 points/month move up in resistance or a little less is what things look like right now.

There is plenty of meat in this market for the bears. You could say this market is averaging 105 points to the bulls per month, and 60 points to the bears.

This is very far out... But, provided no unexpected market catalysts, there is a potential for a crash somewhere around February.

As always, we shall just have to see how things set up... But, market velocity increases contract cycle durations.

We had a six month rally into 2013, then a seven month into 2014, then a five month rally into the recent correction. Now with this velocity increase, duration should contract further to around three months...

That old saying "What goes straight up, comes straight back down...". It's pretty accurate. Slow rallies can sustain a long time, but violent ones burn out fast. Too many people are taking notice of this fast market rise.

Yawnn, just woke up... We started quite a bit below resistance today. Hmmm... Weekly resistance is 2064.



To fade a bounce toward 2040 or not... I think I am going back to sleep. It's not that likely the market has a major drop from resistance until late session if at all. People are well rested and relaxed over the weekend and not much news.

Yea, the dip after the 2040 test was kinda weak like expected... Just under four points. Boo!

Will be interesting to see if the S&P manages to retest the 2034 area toward close. Going to be much better short setups mid/late week.

Btw, my candles probably look damn alien to people. The orange pillars indicate potential bubble formation. When a speculative bubble forms without any unexpected market moving news, it usually collapses back to it's start point, or at least price returns to mean.



A lot of the same idiots that got sucked into Fridays bubble got sucked into today. Speculators, sheesh! Market is only rising by 2.8 points per five hours people... Don't chase!

And, here is one little neat thing in the bigger picture. This is the S&P weekly. Notice, bubble after bubble after bubble over the last couple years. Surges of speculators driving price far above mean for a while, then it pops.



Were currently in a bubble which could easily pop in late November dropping us down to 1975. Odds of 1950 are kinda a coin flip near term.

I'm kinda looking for the late 2013 pattern to repeat. Dual wave, or triple wave before collapse in late winter.

I probably won't be stopping by the forum again this week. Market action is going to start to ramp mid/late week. Going to be focus time!

Market might actually weaken to the point we don't need new highs for a good short setup, lol!