Gator Flips

If you've ever been down south in the US (deep down south like the Bayou), you may have seen or heard the expression Gator Bites and Boudin Balls. If you haven't, here's a LINK to what it means. Well, with apologies to the phrase, this week the gator took a bite. I'm, of course, referring to Master Trader Bill Williams indicator called the Alligator. As you can see from the daily ES futures chart, below, the Gator rolled over and closed its mouth, taking a bite on prices.

In the process, note that three down (red) fractals have been exceeded lower fully beneath the alligator indicator. We're glad to have caught an instance of this for you, especially prior to a holiday. Why? It is because many people tend to have opinions about the holidays. Some of these run like, "if the bears have Thanksgiving, then the bulls will have Christmas dinner", etc. Or like, "the period leading up to a holiday is bullish, then a sell-off after the holiday".

Yet Bill Williams was a great proponent of having no opinions on the market and thought it was best to just "want what the market wanted". He was especially fond of avoiding the news. Granted Bill was very well capitalized, had deep pockets, and other market strategies, but if having no opinions was good enough for him, why isn't it good enough for the rest? After all, who knows when the politicians will deliver some surprising refrain like "tariff rebates", or "reduced tariffs", or whatever the latest fad is.

An 'opinion' might cause you to miss a gap down on Sunday-to-Monday. Or it might cloud your judgement to the effect that, yes, we did have a correction Friday which was more than adequate for Thursday's decline, but complex corrections are possible. No, clear the head, let the market try to tell you what is coming next.

And so, there comes a time to try just to monitor local technical analysis and see if the gator fractal breaks just recorded will amount to anything. One of the things I like about this methodology is that is says there is nothing bullish on the chart until price exceeds a fractal above the gator. As you can tell, this marries very well with Ira's strategy of there being nothing bullish on the chart until price has closed above the 18-day SMA again.

Another thing to like about this method is that it does not require wave labels - even though these can be useful. So, for example, are we in a Minor B wave, or a minute ((iv))th wave of Minor A still? There can be good arguments for either.

So anyway, unless you're having Boudin Balls for the Thanksgiving Dinner, don't let the Alligator bite your Turkey. I, for one, will be taking some time off, and updates will be a bit less frequent.

Have an excellent rest of the weekend,

TraderJoe