You may delay, but time will not.
Benjamin FranklinThese are but two of many of Benjamin Franklin's famous quotes. Actually, he has over 400 recorded quotes. Benny sounded like a chatty patty.
Yesterday I spoke about the need to be patient. Patient is usually equated with waiting. Waiting means the passage of time. Waiting causes anxiety in some. I wonder if its our innate fear of time passing that causes us to be impatient. Then we have quotes like 'Time is money' that place a monetary value on our limited time. Or those of us that place deadlines for our success. How many of you have already planned to retire rich from trading in the next 5 years? Maybe this is what leads to so many bad trading decisions. It is the need to profit quickly to meet our lofty goals essentially placing a great value on our time. But enough of my Aristotle type babble and to the point which is you cannot 'time the market' in the sense of predicting when price will reach a certain level or target. You must simply react when it does.
Yesterday I posted that should a rally ensue that the likely target would be the support turned resistance area of 1594. Today's high was 1593.79. Stop the applause please! Did I know that this was going to happen today. No. Actually I didn't know if was going to happen at all. Support and resistance is not only where the battle of supply and demand has happened in the past it is also the 'time' to make a trading decision. We react to these levels using the theory of demand and supply using volume - the main predictor of such behavior.
So why did price stop at 1594? Price stalled at this level simply because supply overcame demand. Plain and simple. In order to break this resistance area demand needs to overcome supply which is the definition of support. This is the reason why support becomes resistance and resistance becomes support.
So are we going to tank now? Maybe. Or maybe we simply move back to support (1578) and look at volume for clues for our next trading decision. Or maybe we break our predefined resistance area (1594). Lets wait be patience and during this passage of time come up with some life changing quotes.
Thanks for reading.