Value of Perfect Information

Well, to begin, I was up last night managing my trade. I took a profit stop almost immediately and then watched the market tank. It made a serious run at the 865.25 level that I said could not be violated. It stopped short of messing up my count, at least on globex, and then rallied all the way back up. So what was that about? News? I don’t think so! You don’t think they would run all the stops before a big range day do you? I see this all the time on the intraday charts, and the trick is to keep your stops far enough away on intraday or stop out, fade the move and reenter. In this case, I reentered at 866.50 knowing that I had a hard stop at 865 because that would ruin the count I believed in. It got all the way down to 865.50 and reversed. One thing I have noticed is that the “stop-runners” –  little market gremlins – are careful to not violate important swing lows and highs because they know that may trigger something they don’t want. The strong hands then pick up the low hanging fruit on the way back up and the rest of the day is history. That may not be what is happening, because I don’t know the inner workings of the market and the manipulators. But that certainly is what it feel and looks like to me, and that story keeps me out of a lot of trouble.

So where are we going. I didn’t put any arrows on the chart, but I believe we are in daily W5 and headed up. Tomorrow is critical, because right now, technically we can be either in Wave C or W3. The 162% projection of W1 is a critical level because it is the maximum level for Wave C and the typical level for W3. If that gets taken out significantly, then we assume we are in an impulsive wave. My guess then is that we will either see an extended W3 or W5. There is no way to predict which. There is no way to draw arrows on this chart that will mean anything in the move up. Use your trend continuation trading skills and buy the dips if we prove to be in W5.

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