Today is Tuesday, June 1st and the market sold off into the close and I got my wish.

We had a sell off into the close and ended the day at the lows, with the Dow off 112 points and the S&P futures off around 20 points. After yesterdays late post, we did go down again hitting the low estimates of the range I thought we might see. With the early target hit of 1080, that was good enough to minimally satisfy the pull back. As it turned out, we went a little lower than the low estimate of 1075 by about 5 points on the S&P futures. That was fine and all looks good for what I think may be coming.

After the open, the market was contained from going up, but did rally very nicely. We never got over the 1096 number that would send us higher as called and that was actually a good thing. This is just something that I see as a possibility and will remain open minded to it. With the market down today, the new sentiment poll will be taken after today’s close and it may sway the “Professional Newsletter Writers” to have a bearish bias. The trend for the last 4 weeks has been down and with last weeks poll, currently at 39 % we could see it get into the 35% area. It has dropped off from a high of 56% bullish just a few weeks ago. With the start of this week down, it may cause them to bit on a sell off scenario and push the bearish bias, which in turn will be bullish yet again.

I don’t know how they will react and I won’t know until Thursday evening as I do not pay for the real time service. I only watch and report it, because it is very interesting how accurate the opposite is so often true. This is only for the larger directional moves within the market. I would not be surprised to see a big up-day and move this week,  if in-fact the bearish trap was laid.

Just from a price action standpoint, if the market was going to make a run for it, we are in the area for it do so. It lines up with other things, making it a very possible move. From this point, it could move very big over the next few weeks, catching many by surprise yet again.

Keeping with the theme I was talking about in my previous post, traders need to look both ways. I will be looking for where the market will likely break down and break up big. That is also a very real possibility and cannot be ruled out. If you do rule it out, you won’t mentally be prepared to do what ever it is you may need to do, because your mind won’t allow you to take action against your strong directional bias. I often say, as traders we need to read the current action but see what the market is saying about each case, bullish and bearish. This is same for short term moves throughout the day. Build your case for bullish, but balance it against a move against you. which has more weight and how strong is the evidence. The strongest case, deserves the action and to what degree.

In today’s trading I had a good day. I was just trading small and picked up a few small scalp trades as the market was looking for direction. I saw a move short after we ran into some overhead resistance and initially came in a little early.

I did get stopped out, and I would have to say that this gave me a little  trading Fear attached to it. This is not the normal fear a trader will exhibit, but this was based on “trading fear of missing a move”. I have talked about that before, and it is something that needs to be monitored and controlled. If you feel strong about a particular move, and do not want to miss it, you have a tendency  to get in it to early. That can cause you to get stopped out and you may loose heart to re-enter thus truly missing the trade. There is a balance to the timing if you see a move coming. You still need discipline to hold yourself back and not take the trade until it is ready. Like baking a cake, if you pull it out early, it won’t rise and taste very good, but if you pull it out at the right time, everything comes together. (Funny example, but I just seen that happen in my home as my wife was baking one, L.O.L)

I did enter short on the trade and doubled up on it as well, because the evidence became very strong that a move down was imminent.  I would have like to have waited just a moment longer until all the evidence was in, but I did not and that is why I got stopped out. If you notice in the video, the indicator was spot on and I was not. That is why I do like using this tool. I don’t overly lean on it, but new traders could until they see and understand “price action structure” like they should.

That’s it for now, all traders need to find there trading edge and exploit it. What ever you do, try and be consistent. That way, once you find out what works for you, you will be able to do it again and again and that will take you where you want to go.     Good Trading to All !

Related posts:

1. Market Sentiment Turns More Bullish – Trader Beware !
2. Expecting Bullish Market Sentiment to Rise Further
3. Bullish Sentiment backs off- Room to Rally
4. Bullish Reaction Move Expected to Show Up Soon
5. Market Drops Off as Sentiment goes with it

Tags: bullish setup, overhead resistance, price action trading, trading fear