Your Subconscious Mind Knows Everything

Your subconscious mind knows everything. You just need to listen to it.

I say this because of the textbook Turnaround Tuesday action that occurred yesterday. A part of me "knew" it was about to occur. The other part was lazy and on autopilot, stubbornly waiting for lower levels.

In the meantime, curiously, my bias is higher over the next several weeks. Yes, I think we retrace a bit lower. I may have to change my 1132 target. But I'm inclined to be a buyer of a washout on this decline. I think we can get under 1174 and over 1230. I'm starting to look for 1250-1275.

More will need to unfold over the next few days. But I'm reading the current decline as a "sloppy" one so far. These are exceedingly difficult to trade, but that is their purpose -- to wrong-foot as many people as possible and then reverse. Be ready. Ideally, have a method that allows you to participate on both sides in a risk adverse way.

Get used to being wrong if you want to be in this business. And have a method that can keep you out of trouble. I was very wrong all day, did 12 different short orders, and didn't lose. (I didn't make all that much, either.)

I am proud of one thing yesterday: knowing when to get out. My last short was covered at 14:59pm EST. The EFSF "news" hit the market at 15:00pm EST.

Yesterday is gone. What now?

On the daily charts, there is clear air up to the 1255-1260 area. The 200 day moving average is currently 1275.48. Now, do I think we head to 55-60 in a straight line? We can, but the way I see the current structure, it could complete an impulse before there too.

I'm still looking for a 3-leg move from the 1074.77 lows. Yesterday's action merely tells me that we are still in the first leg.

There will still likely be a deeper retracement (this is what I was looking for yesterday) that will be the 2nd leg. The 3rd leg will likely be the one that takes us to 1275 or even higher if it really gets going.

The terminus of the 3rd leg is where I want to be out of longs and exceedingly short. It will probably be a scary trade.