I'm wondering about possible scenarios for a full playout of this test and retest at SPX showed here on Friday:



... and the only reason for a quick drop from here to the lower ML could in my opinion be a failed 5th wave at SPX and ES. Because on many other indexes the recent rise looks like already completed 5th wave:

Maybe the following setup will finally launch the rise in ES:

accompanied by a retest at lower line?

Originally posted by jarek

Maybe the following setup will finally launch the rise in ES:

mob?

ES reached 1227.25 twelve days ago and remains in a tight range since then:



Let's hope that the breakout will take place still this month...

ES may have already reached its high in terms of Euro.

In 'the old days' before all this government manipulation, I'd say that looks like a topping formaton to me (and some might see it as a 'megaphone top' pattern). But nowadays, like trendline creep, I'm used to it breaking the opposite way as expected. As I said, though, puts at the end of last week didn't seem like a crazy idea to me.

Originally posted by jarek

ES reached 1227.25 twelve days ago and remains in a tight range since then:

Click image for original size

Let's hope that the breakout will take place still this month...

Good observation. Like crude in terms of the Euro, being right at the all-time high area. Or the DOW still dropping since the Mar '09 bottom, in terms of gold. These things are worth keeping an eye on.

Originally posted by tx_ches

ES may have already reached its high in terms of Euro.

So, Jim, how'd that play out for you? It didn't. Not even close. I try to point out when things play out as expected, and when they don't come even close. It's important to understand that my style has me looking at what I think are the top two, maybe three 'scenarios'. This helps me create a framework for my potential trades, and for my management of existing trades. It is never more than a scenario game, a framework, though.

I need to see price action follow that framework so I can take the appropriate action, as laid out in my 'Trading Plan'. That's why fade entries and very low confirmation entries don't work well for me. I need to have the market give me information that I can use to make my decisions. I pay up for more confirmation not only because I feel I get back enough for that extra price (in terms of perceived higher probability of success), but also because the additional information allows me to make a better assessment of the probabilities (or so I think).

In this case, although I still think medium term that puts are not altogether crazy, I still felt shorter-term they may try to take it up for another nominal new high, to trap more people and strengthen the 'megaphone' pattern. Just something I thought they may try (and still may), and I wanted to be ready for it. For a put play, this would be something that would not hit my stop (I'd structure the stop around that premise). I just wanted to follow up, so it is clear I comment on ones where one of my key scenarios plays out, and I comment on ones where it ignores my scenarios.

Originally posted by jimkane

Futures start out on a gap up, strong. No surprise there, it's the only way I think they could have opened. Now, do they run up +10, and then another +10 tomorrow, for a big +20 day? We'll see, but I'm thinking it sure is one possibility.

And this is way after-the-fact, so take it with a grain of salt, but I've been intraday short side bias for some time now, based on the lack of the +10, +10 scenario playing out, and the lower high right at a key line just after 11 AM. Watch this bigger GZ/.886 area in here now...

Originally posted by jimkane

... so the Gross post will be short...

I see that we have a new definition of "short"