The developments of the last 2 trading days make me consider the whole rise from the post crash bottom to the last week's high as a W2 Kane ABCD:





Timewise it doesn't look good because it rarely happens in a zigzag that CD leg lasts 80 times longer that AB leg. But if it comes to proportions - it's almost perfect: AB and CD legs are nearly equal and whole ABCD retraces between .685 and .786 of the preceding leg down from the top.

Initially I thought that whole zigzag should finish at May 11th high. Now I see that high as a C point of a W4 correction in the CD leg:





The behaviour of the market in the next couple of days should help us jugde whether this interpretation is correct. This is rather important because in such case we should expect a drop to at least 1020 (1.272 external retracement of the ABCD) and probably much lower if W3 down has just started.

Sure looks like 'risk on' may be starting. They need to get past this chop and grind up, but this 'should' bounce pretty big off this low area.

Could be another Euro intervention, which will bring risk right back on.

Regardless, I'm strong long side bias S&P, crude, Euro, and gold intrday in here. Crude is doing the best at the moment I'd say. S&P is the one I worry about...

Former swing high areas hit across the risk trade, and they are all stalling/pulling in. Just a pause that refreshes before they all explode, or is that all they can do? I suspect they are coiling to explode, but they do what they do.

The riskers just have no 'Umph', no get up and go. If it can't go up, it may go down...

Originally posted by jimkane

The riskers just have no 'Umph', no get up and go. If it can't go up, it may go down...

Yep.

I get so tired out, though, when they 'game' it. What do I mean by that, in this case? I am a trend trader. When a correction occurs, I like it to take out that correction starting point ASAP, and then keep trending. I am not opposed to a 'W2' along the way, in fact I like it because it is healthy. That's the heat I sit through, as explained in the books and in more detail to the mentor students. But when they drop it to the .618-.886 area and then start to chop it in an obvious attempt to support it, I dislike that.

It is part of the market action, and I can manage accordingly, but I dislike it because it usually either means my trade has played itself out, and not as much as I had hoped, or it is going to do a bunch of things I may not want to sit through. And on a day like today, as we have seen already and may see again right here, it's their favorite game to play. It's how I came up with the usual .786/.886 game zone. So, let's see here what they do...

.786 hit within a tick. Let the games begin...

Definitely, positively not 'risk on' today. They attempted it, feebly, and very quickly gave it up. Forget the games, to me this is a sell (I don't mean I'm selling here, obviously, it's an expression). If they pull a miracle here at the LOD, good for them, but this is on the morphine drip in here.

Jim, the one man show.

All that matters now is does it reverse off my area here after setting the new LOD, that's it, a retest and done, or do they panic, in which case this thing will be fighting another 'flash crash'. The latter surely is a real possibility.

I suspect a big run up in GLOBEX and a huge gap up over that line. We'll see. The weekends are getting longer and longer as the inevitable blowup gets closer.