The collision of global markets and social mood

Monday, April 30, 2012

The Tide Is High

Despite the benign appearance of a mere 3.5 point decline, ES futures have had a wide swing overnight -- a total of 8.75 points down so far.  Not the end of the world, but definitely not follow through for the rising wedge that was building.

Europe is down this morning, with France leading the way.  Perhaps the markets take a breather here, or perhaps the tide turns more convincingly.  Friday's 1406.64 high is close enough for government work to the 1407 Fibonacci 78.6% retracement level cited previously.  Trade below Friday's 1397.31 low would only be the first indication of a change in plans for the market.  I'd rather see it under 1375.57.

During Friday's conference call I learned that the very well-known portfolio manager runs his entire fund based on one simple pattern in the market: the tendency of price to return to the 150-day moving average as support or resistance and then reverse.  He trades equities, commodities, energy, bonds, and currencies this way.  It's an elegant system in its minimalism.

Got to Scottsdale finally on Saturday after a night in Tucson.  Continuing the Wall Street theme, while out at dinner I saw Trading In The Zone author Mark Douglas eating and drinking wine a couple tables away with either his secretary or his wife.  Hard to tell.

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