Monday Morning Musings

The cash S&P500 formed a downtrending price bar on Friday but there is nothing new to report. We are looking at a countertrend position on a break below 847.12. An earlier warning *may* be given by the break of the Level 2 Beta – X trendline which stands at 853.28 today.

The price target on the qualified break of the latest TD Supply line stands at 892.64. Yet another Supply line sits at 888.11 today but would not be qualified if broken. Meanwhile the TD Demand line sits at 862.68 and would be qualified if broken. Finally, the DeMark REI oscillator would signal a “sell” on a move below 866.10 today.

Trading Philosophy (draft): The objective is to identify the trading condition set-ups for swing trades (about a dozen trades per year held for varying times up to 2 months maximum).

** Countertrend trades will be taken when a new Level 3 Price Pulse begins. Each of these trades will be broken into three equal “positions” when executed with the goal of taking profits at each of three price objectives.

** Trend continuation trades will be taken on qualified breaks of TD Supply and Demand Lines. Each of these trades will be thought of as one unit with the goal of taking profits at the single calculated price objective.

** The capital exposure for any one position will not exceed 3% of the account balance. All trades will be held with a protective stop-loss.

Based on the draft trading philosophy a short position (not to exceed 3% of the account balance) would be taken on a move below 847.12 today. All such trades are hypothetical and do not constitute advice to buy or sell any instrument.