Today is Wednesday November 18th and tomorrow could be the day.  

I am sure as I said yesterday that I know a lot of traders are just a bit surprised that we have not dropped big as of yet. I think they still think it is coming, but it won’t come until the majority stop expecting it. That is just how it works. If the majority were always right, no one would make any money.

We are playing off many emotions at this point of the rally, those who are just sure we are going to drop like any moment and are building positions to take advantage of that drop. They have been loading the boat, so to speak during the last few days.

What is going to happen, when the boat leaves the dock and decides to go to Alaska and they have only packed cloths for Cancun. The itinerary changed and they did not get “The Memo”. Can you say, short covering rally. I can it say just fine.

All of this talk, is  just to get your attention, to pay attention to the price action and don’t get sucked in too much by your emotions.

Trading is an emotional endeavor and will always be that way, that is what gets people to place orders, their conviction about direction in the stocks they follow. The important part is to not become attached to any one position or belief that is so strong that you can not see the changes that are taking place.

If this market takes off , I believe it will be a rally of several hundred points on the Dow. That is not a popular opinion right now. I may be all by myself with that call and that is OK.

I will tell you, if certain events happen and things change, I will change along with them. That is how it is during the day while day trading which is what I do.

If you get to convinced that a move is going to happen or about to happen, you can become blind. I am not kidding. I can only imagine that it must happen to a lot of people.

This is one of the biggest things that turned my trading around and was one of the biggest problems I had to overcome. CONVICTIONS. If they are to strong, and you dont’ get it right, you are in trouble. You end up building your game plan around what you have already decided and see everything through the conclusions that you have already made. This is big one.

I hope everyone reading this can let that sink in a bit, I am sure I was not the only one who used to do this. I know it happens everyday by more people than would care to admit to it.

So, in short, look both ways and try and come to an understanding of how price movements work. Indicators are nice, but they have limitations. You want to be able to understand why price is moving and how it relates to momentum and  the release of pressure points.

Momentum takes place in every time frame and is relative to the time and space that it takes up. When you ride through highs and lows to an overall price objective, it can be said that you are in a trending market. You have to be willing to give up profit, for the great gain down the line, which means you need to stay in the market longer.

Having an idea of how far the market will carry you towards your price objective is important, but how do you do that. Well, as I said, I believe every trader needs to understand how, why and when all of this takes place. A better way to describe it is coming to understand that the stock market is 3 DIMENSIONAL . You may say, “what is he talking about”?

The three components that make up the market are as follows;  * TIME * PRICE  * SPACE . It is the spacial relationship of these three components that drives the stock market. The combination of these three elements are what moves markets. When one of these three and or a combinations of them in varying degree’s gets out of whack, they re-align themselves and adjust.

If a market stalls and goes sideways for several days, it may be absorbing previous gains and needs to rest, so time is now a factor. As time passes, buy orders are being placed on both sides of the market and will add to or take away from the current price in a very big way. Prices have as well stalled along with time and will only add to the move once it again resumes. Space is the element of the current price range that takes up the previous two, time and price.

I will tell you know, this is not an easy concept to explain and if I choose to expand on its many functions and how it relates to price action, I promise I will do it slowly. There really is something to this. Understanding how and why prices move and how it can be used to identify key target area’s can only add to your overall bottom line.

Maybe tomorrow, I will go back to a very simple way of explaining this concept first and if I continue with expressing myself on the subject I will go a little deeper. Overall this is not rocket science or has nothing to do with things like Eliott Wave or what have you.

I have only heard one person in my 25 years of following the market talk about these spatial  relationships. I have looked on the internet and I can not find anything on the subject. I have seen the fullness of this expressed in the markets on a daily basis. Writing about it here, affords me the opportunity to clarify my idea’s and hopefully help a few people on the way.

That is it, I hit my limit, 1000 words. STOP, DO NOT PASS GO…..