Rejection - 2

Yeccchh! Just another wedge. Yup, nothing I can do about it. As I have said before, "they can wedge the wedge until the wedge won't wedge." So, what does that mean? It mostly means to "control one's emotions and just count waves" as best you can. And what does 'controlling one's emotions mean?' It means if the wedge breaks up, don't get perturbed. If the wedge breaks down, don't get disturbed. And if price does virtually nothing for a day, don't get stressed. Recognize that - just like you enjoy some time off - the market might like a little summer vacation, too.

ES Futures - Daily - Wedge Again

And controlling one's emotions also means not betting the farm on trying to make a round number like 4,400, even though that's possible. And it also means not trying to rush short positions while the market is above the 18-day SMA or while the swing-line is not in a trend. If you don't know the rationale behind this trading technique, I encourage you to read or re-read my paraphrase of Ira Epstein's guidelines for trading - which you can find at this LINK. 

Still, there are some objective things we can say. 1) The daily MACD has the prospect of rolling over. But, it hasn't done it yet. 2) The daily slow stochastic has the prospect of curling below the 80 level (or 79 if you wish), but it hasn't done that yet, either. 3) The DOW still hasn't made it's new high, yet. 4) There are some (many) divergences showing. None has mattered 'much', yet. Some. Not much.

With regard to the wedge, there is both an up count for it, and a down count for it. Tomorrow is Friday. Often, that has resulted in the high of the week. An up count could be a diagonal. A down count could be that the wedge itself is just the 'b' wave of a flat - not a true diagonal. Still, when it comes to trading wedges, some decent advice I've seen is to look for an impulsive break of the wedge followed by a back test. (If the wedge breaks up, the back test is down; if the wedge breaks down, the back test is up). Then, see if there is upward follow-through or downward failure.

But, that is just a suggestion I've received. You must do what you see fit. It's never fool-proof, and you must make your own decisions at your own risk. Certainly, Ira Epstein recommends no sales above the 18-day SMA. You might say, "that's wasting time". Ira probably has a lot more clients than you or I do because he has heeded this advice - which he teaches.

One difficult item to deal with is the trading algorithms. Many trading houses use a "news-reading algorithm" that parses the words in headlines and stories and trades in nanoseconds off of them. Thus, these news bots can fire off trades and get an edge before the retail trader can possibly even react or press a button. And what is there a real lack of right now? Market moving news.

Yes, there's a little news on higher inflation, and on good economic recovery. And there is some news on human achievements - like Branson and Besos going to space. (Are these top signs?). And there is news on having to cancel crowds at the Olympics for the Covid status. But, what is missing is the usual hedge-fund crash, foreign country currency crisis, or other perhaps derivative-related crunch in the money markets.

So, Chair Powell got to sit poker-faced and smiling before both the Senate and the House committees, as they asked questions, like (paraphrase) "what signs do you need to see to start tapering?", and he can sit there and just patently refuse to provide them a real answer. He just grins behind his grey hair, and provides no information to them or to the public.

To me, it sounds like a massive dose of complacency. And that is typically what tops are made of - eventually, of course.

Have a good start to the evening.

TraderJoe