Thursday 5 May 2011
The activity of many of the markets on Thursday was an historic
one, most notably in silver and crude oil. Staying one step behind
the market has its advantages, and untilizing developing market
activity precludes the ego-driven need to "predict" what any given
market will do. We were looking for a pullback in the S&P,
qualified by smaller ranges and lower volume. [See S & P - One
Swallow Does Not A Summer Make, click on http://bit.ly/msh5Zb,
2nd and 3rd paragraphs].
You can see from the ranges of the past three trading days, they
became larger, not smaller, and volume increased, the opposite
of what to expect when it was stated that a buying opportunity may
present itself. By watching developing market activity, there was
no need to "predict." We knew ahead of time what to look for; it
just never developed. Friday may be a different story, but until we
see how price and volume unfold, no one can know if change will
occur, or if the market will continue lower.
We addressed staying one step behind, specifically in the silver
market. [See Silver - A Follow Up, click on http://bit.ly/jJ5rgg, 3rd
paragraph], where we said a correction was likely, but we thought
a trading range might develop. One can be wrong in not knowing
how a market will unfold, but not being in it allows for such "error"
in assessment. The concluding sentence, last paragraph of the
same article, said to let the proverbial dust settle before jumping
into the fray. Things never settled as silver declined all the way
down to the $34 handle, from near $50.
The logic behind reading market activity most always gives some
sign of change. "Predicting" egos usually fail to see any sign, while
those of us who endeavor to rely upon the market-generated
information can most often avoid negative situations...not that we
haven't been caught a few times in the grain markets by not reading
the signs correctly.
The markets will regain a level of safer trading. One need only wait
for the message[s] to appear.