Here comes the full set of EWave filters I am dragging onto Monday's battlefield. First a note on how I create these EWave filters (a "filter" is basically an on/off switch for trading).
I have always built my charts from the bottom up, instead of the top down. It helps me hear what the market is mumbling with its forked tongue, rather than searching for a pattern that fits my own pre-conceived notions.
Every chart level gives birth to the chart level directly ABOVE it, not below it. I do this for the same reason that builders throw a foundation in the ground, then a 1st floor, then a 2nd, etc. If I start with the 10th floor, I end up with a castle in the sky. Might look nice. Might feel nice. Might even agree with what a trader WANTS to happen ... but it's still just a dream home.
Not to say I don't get it wrong, of course. I blow it all the time. But my ear is still closer to the REAL ground, and I think I trade better because of this bottom's up approach (which naturally appeals to the Irish in me anyway).
So ... that's what I do when I work up my charts every day ... the 2-min bars chart fits into the 6-min, which fits into the 18-min, which fits into the 50-min, which fits into the 150-min, which fits into the Daily (450-min), which fits into the Weekly, which fits into the Monthly. After all that, I still just treat it as a filter in my trading hierarchy of (1) signals, (2) filters, and (3) hints.
First, the Preferred Series. It is the "old" Alternate from last week. It suggests that the lows of the year were made on March 22nd. Although the market will take another stab at that level, it should hold. And, first, we have higher to go in the immediate future.
Monday should see further extension north from Friday's close. The trend has turned powerfully bullish. The structure suggests a push north of 1290.00 Spoos by Tuesday. It should happen quickly, if it will happen. Any stretchmark sideways will get me looking hard at the Preferred Series from last week (now the Alternate). Especially since the latest COT numbers show the Commercials increasing their near-record short position.
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And then the Alternate, which is the "old" Preferred, and it almost hung onto the top slot over the weekend, despite the very bullish trend closing on Friday. Why?
Because the COT (Commitment of Traders) numbers released late on Friday showed that the big bucks increased their net short position in the Spoos by 3,898 contracts. It still does not bode well for the bulls, because the big boys are likely to revisit lower prices to scrub their short positions into profits.
Any continued increase in net short positions by the Commercials next week would get me to flip-flop to the bears again. And because of the increased short positions just reported, it will not take much for me to switch allegience back to this series well before then.
Here's what will be a key for me: if the market heads lower with any power on Monday, right from the start, I will quickly jump back on this series.
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