In the conclusion of the newsletter this weekend we wrote, “We have been pretty active since this whole correction started but we are stepping back now for the first time and seeing how Monday shapes up”. We basically couldn’t think of any plan coming into today: we weren’t interested in buying the bottom trend-line test this time (too many tests in short period of time) and we felt like we were too oversold to initiate shorts. Basically, we had no conviction in either direction coming into today.
We broke the flag today — next support is 112 on the $SPY. Breaking that bottom trend-line removes a lot of our edge as we were trading against that for the last month. We mentioned in our post The Big Road Map the possibility of creating a new range and it’s quite possible we’re in the process of carving out new pivots for that scenario.
August was a good month for us as range-bound strategies ruled supreme. However we feel now (and hope that we’re wrong) that we are entering a more difficult stage of “slim pickings” and are backing off and going into more defense mode. Basically, we are protecting recent profits and refuse to give them back in what very well could be an edge-less trading time. To be continued….
Economists Forecasts Tend to be To Optimismic
6 hours ago