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S & P - Nearing A Resolve. Need A Strong Volume Directional Move Out.

Wednesday  9 March 2011

 Last sunday, we said the market was in a trading range and not
to trade in the middle where the level of trading knowledge is at
is lowest, because price can go either way.  [See S & P - Sideways
Is The Current Choice
, click on, 3rd paragraph]. 

 When a market transitions into lower highs and higher lows, it
can only be one formation, a coiling wedge.  There is a degree
of balance between buyers and sellers, or so it would seem. 
Eventually, one will win out over the other, so the "balance" is
deceiving.  We have conjectured that volume favors the breakout
to the downside, see the first and second paragraphs from the
previous article above.  There is only one certainty in the markets,
and that is anything can happen!  There is no need to "predict"
or try and get a jump on the market, anticipating by taking a
position before the actual breakout.  Let it happen, first, and then
"go with" the market.

 What can be expected is a strong move out of the established
pattern that has a wide range and a strong close in the direction
of the price breakout.  The confirmation that the breakout is real
will be a weak reaction back to the strong wide-range bar.  Using
the present tense market activity eliminates any guesswork.

S&P D 9 Mar 11