Out of Sync
Some days the market will only give me half the signal I’m looking for, and that’s what happened today. Fortunately half a signal isn’t enough to trigger a trade, but it certainly can be frustrating.
After a one-bar pop above yesterday’s high we dropped for about 30 minutes and then put in the low of the day. The bottom was only a 38% retracement and lacked a divergence, so I didn’t have an entry.
As soon as we made a new high I followed my usually procedure — marked off the 127% external retracement and the potential targets for an A-B-C move (shown in yellow.) We went right through 127%, and then the mid-day top occurred between my targets. The fact that we had a nice divergence at the Test of Top wasn’t enough for me to trade without the encouragement of some Fib levels at the same time.
The afternoon pullback made another A-B-C pattern with the length of C equal to the length of A (a Measured Move.) Notice that it also retraced right to the support of today’s opening. Two reasons to trade, but I wanted a divergence to make it three.
With two reasons for a bottom at 11:30, why didn’t I take that trade? Because although I don’t have any statistics to back me up, I feel that a lack of early setups is too often followed by failing setups late in the day.
Yesterday the signals were clear and worked. Today we were out of synchronization. In fact, even the various markets are providing conflicting information. The Russell is the only one that closed at an intraday high. Is it leading the way, or just out of step? That is going to make me cautious at tomorrow’s opening.
