Arrogance - an insulting way of thinking or behaving that comes from believing that you are better, smarter, or more important than other peopleThat my friends sums up the majority of the market participants. If you are insulted by this then you are probably losing at the trading game. More recently I had someone ask me about a specific stock that they were thinking of buying that same day after a nasty earnings drop. The stock at the time was trading at the lows of the day on big volume and asked the silly question 'Why do you want to buy it now?'. I guess a silly question deserves a silly response because the answer was 'I think it will go up now'. Duh! Why didn't I think of that. Believing that just because you decided to buy a stock where the share price is dropping precipitously will just stop and reverse immediately based on the sound analysis of hope or gut feel is just plain arrogant. Nonetheless you learn quite a bit talking to other market participants successful or not.
Enough of my rant on with the markets. Again we begin with the same SPX 15 min PnF chart we used in yesterdays post. You can now see after today's session why high volume areas of accumulation/distribution or what others may call a trading range are important in determining support and resistance. To recap what happened today the SPX dropped to back into the trading range between 1747-1741 ( I admit I did say 1745-1741 so please forgive me). It actually dropped to the low end of the trading range to 1740.5 before bouncing still closing within the range.
So we have our lines in the sand. The break of the upper or lower (orange lines) ends of this price range will dictate the next direction and most likely move to the next level of support or resistance (blue lines).
Thanks for reading.