Thanks for the great analysis as always Orwell.
It's funny actually, after I posted that reply to Strauss, I had a good think about my position and actually decided to remove my stops, and re-evaluate during the Monday US session. To me, Friday's bar looked typical of an exhaustion gap. (although could turn out to be a breakaway gap??) -
@Jako64 do you have any thoughts?
I really did not want to get stopped out if the big end of town sucked in traders by pushing premarket up and over resistance then distributing into it after a green open...exactly as you are suggesting. If we see a bullish candle on Mon and follow through on Tues then I might have to reassess.
Other than my own thesis as discussed here and on XSO, my favourite analyst has gone bearish, after being in "buy the dip mode" September...which in hindsight has been correct so far.
I actually got onto him because of his great calls on gold. He's been extremely accurate since I've been following him, and called the 2011 top, pretty much to the day. Since following, I've found that his most accurate indicator is some algorithm he runs to detect "smart money" flow. I typically hate this term because it gets thrown around willy nilly, but his definition is different. Most people think of smart money being big hedge funds etc, but he defines that as "big money". He calls smart money "ultra sophisticated investors who know more, who know early, and have more analysis power".
Regardless of the definition, this indicator is extremely accurate. It's amazing how often they forecast FOMC decisions (this plays on the "knows more, knows
early" comment, wink wink nudge nudge). He doesn't allow subscribers to access the money flows, but will occasionally make mention of it in his daily market commentary. Without exaggerating, when he says they are aggressively buying or selling, anecdotally it seems to be right 80-90% of the time, even if only short term. (There is no way to know if the buying/selling is short-term or long-term of course).
Anyway, getting to the point, his algorithm has detected smart money selling into this rally. Of course they might be wrong, but I'm happy to stay on their side of the trade for now.
Thanks again for the comments, we are definitely on the same page.
(20min delay)
