Today is Thursday November 18th and we finally got a clue of what is going on.

Today was the day, that decided the short-term direction. It came in the night trading and did not look back. I can say, that after the night trading had pulled the market down, the open was a sure thing to come off of its high and the first move after the open decided what the direction would be.

Just a few minutes after the open, the market started to form a very nice triangle formation with the tops coming down and the bottoms holding for the moment. After the apparent break short the move was established and the only trade an open minded trader could take was short.

That move was good for about a good 10  points. I am going by memory and I know I am close, but it sure was a clear signal down. If you look at a daily chart, you can see a clear point of resistance and I knew we were up against it, but I just wanted to stay open to the possibility that we could get a ”Blow off Top”. That is a fast hard spike to the upside which usually takes out all the stops, holds for a spell, then drops like a rock.

I did not want to be taken by surprise and did not want you to be either. I have one of the video’s below, showing a 120 minute chart of the Dow and you can see we were right up against resistance at yesterdays close.

Today was the day, that decided for us, which way the short-term direction was going to take us. Currently the trend is down. There is a good chance the S&P will bounce off the low established from last week around 1082 or so. If it breaks like I said yesterday, it will clearly establish the direction as down and lower prices are likely. 

If we do come down to that neckline, it will look more like an early Head and Shoulders formation. The likely next move after that, is a bounce up about half way and then a failure below the establish pivot point.

Trading is about observing conditions. If this, then that. I have said this several times and it will consistently play itself out in the daily price action on a regular basis.

There are those who try and predict moves and I do it on occasion. It is really best to keep opinions close to the vest and then trade-off of what is happening. I get my best results when doing this.

Sometimes I like to be a hero and go against the grain, like yesterday, just a little. I knew it was not probable but I thought, I should leave the possibilities open. 

With the open, breaking support, and a consolidation taking place at lower levels, it does not take a genius to see that we are consolidating for lower prices. Some I am sure will not be able to see it, for all the reasons I mentioned yesterday.

Keep your mind open and read the current  price action. After todays open, it was saying lower, can you see it. Get in a practice of looking at different time frames.  Try and learn to think on your own by learning how to read price movement.

I will and can tell you right here and now, that “PIVOT POINTS”  are the key to help you determine the direction of future prices. I don’t often say much about how exactly to read price action, but if you are reading this and if I was you, I would commit that first line in this paragraph to memory and investigate further.

If prices move higher, it is obvious that they have to push ahead of previous highs. What do you think is happening when that happens. Small resistance points are getting over-run and new highs are being discovered. The same is true for the downside.

There is a formation that happens on rare occasion and it is called “search and destroy” or at least that is what I call it. It pushes higher to take out a high and it immediately goes down to take out the pivot low. After that, it pushed straight up to take out the pivot high again. Each break over the highs and lows are causing the stops to be hit and additional movement in that direction.

This formation is rare and it does not happen very often. That being said, the norm is, pivot highs being taken out followed by further increases in price. The same is true on the down side. Pivot lows being taken out, followed by further downside price action.

That is the very basic form of how prices move higher and lower. You would think more people would try and understand this and how to use it to their advantage while day trading, or any other kind of trading as far as that goes.

OK, that is it for now, I may continue with this tomorrow, we will see. I never know what I am going to say each day, it just comes out. Well, this was a really important point for those who are astute in understanding what I am saying.

This is the hidden gem, in understanding price action. Very basic, but no one is born knowing this and even thinking about it. If I were to show you, which I won’t right now, the lights would go on. They would be lit up like a Christmas Tree. That was my response when I understood it, many years ago.

Below, I have a couple of video’s from today, one of them I think the second one, has a current view of the daily Dow and showing where we were and where we are likely to go.