The market rallied a bit on Friday as it came off-key support. The momentum on the 120 minute chart is still down and will remain that way even if we get a modest rally on Monday. If it were then to back fill and rally again, it would probably turn up. I don’t want to get ahead of ourselves, so we will just wait. I do sense something brewing here very soon.

 The Sentiment numbers will be coming out on Tuesday, just two sessions from now. If the market rallies even a little, it may be enough to influence the balance of power to the long side and get the bulls to finally bit. This last weeks numbers of 52% are the highest since the rally started back in March. That is significant,  one more push to the upside and the trap will have been laid. Meaning the Bulls bit and take the bait for a continued rally. That is just what I potentially see.

 The Bears are at their lowest numbers in 5 plus years, around 17% bearish. That is not very much. There are many in the middle and they may soon be persuaded to join the bulls, a sure sign we will see a sell off. I have been following these numbers for over 25 years and at key turning points in the market it has just been amazing. It has called every turn that I can remember. When you combine that with how I approach the market, you have something.

 When you have a prolonged sell off or rallies these numbers can linger for a while before you see a turn, but we are not in one of those situations right now. I think, once you see the bullish extreme post, it will only be a matter of days before you start to see the sell off start in full swing. We are not there yet, but I will let you know as it develops.

 I will be able to see the current numbers as of Thursday. This is delayed by two days, I do not subscribe to the service.

 With all the gains locked into the market, I do think there is some validity to January being a sell off month, as I wrote about last week. Stay on your toes, I think the volatility will be back pretty soon. Until then, I may be lying low and enjoying the Holiday’s.

 Last week, I did post some turning points in what I call “Scalp Mode”. Those turns are what my method gave me as signal points or turning points as I call them. There is a difference in my T-2 screen turning points, but not by a lot. The point for bringing it up is, these were the signals my method gave as the long and short trades. Two things remain. Actually taking the trades at those points and managing the trade after you get in. I need to have the discipline to follow my own signals and manage the trade well myself, most often, I am right on. It is always up to the individual to follow the method and trade according to the plan.

 Anyone who does not do that is off on their own, sailing in uncharted waters, why do that, when you have a map, GPS satellite and all the latest navigational equipment to get you where you want to go.

 That is what I say, when I deviate and quickly remember what it is I have. So, when I post those turning points again, just remember, that is what is possible. Any trader just needs to follow the signs and learn how to navigate through the waters and he or she can catch there points for the day as well, with very little draw down, a key for me.

 Any trader interested, to learn more, now is the time to inquire, before the volatility come back into the market. Be ready and able to start the year with the right plan to approach your trading. I teach all of this in my course and follow-up with all students, one on one, to equip them for the journey. I provide the full explanation of the method with all the rational and back up which gives me those exact turning points. You will see each day’s turns explained and identified and why. After getting a steady diet of this on a daily basis, you should be able to get the same turning points on your own. I work with students until they understand the method and are able to apply it to the markets. I take as much time with each student as he or she needs. I primarily trade the S&P but it can be applied to other markets.

I teach trading for a modest goal 2-4 points per day, as the market provides. Once you have your goal for the day, I strongly encourage students to close it up and do something else. My motto is “Keep the struggle to a minimum”, don’t fight it. If you have an apple orchard and you like apples, you don’t need to go and pick them all at once, just pick what you can eat for today and get some fresh ones tomorrow. If you picked them all at once, they would go bad after a while and you won’t be able to enjoy them anymore. Maybe that is a corny example but I think you get the point. Trade for daily income as opposed to getting rich all at once. The first may happen the latter probably not.

 I will following up with my Thursday post sometime this coming week.

Until then, Good Trading.

Related posts:

1. Trading in line with your Personality and without Struggle
2. Scalp Trading as a Form of Income
3. Trading Lesson and Live Trade on S&P Futures Video