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Welcome all Safety in the Market traders to this month’s dedicated newsletter. Last month when I wrote for you we were looking at a potential double top formation on the E-mini S&P500 (ES-SpotV). This double top formation has been a good talking point for me at the recent Perth Gann Mastery Workshop and Brisbane Interactive Trading Workshop. Things did take a twist though whilst in Brisbane. I’ll explain further as we go along. For now Chart 1 (below) is one lifted from last month’s article and shows one part of what we were looking at for the double top.
Chart 1 – E-mini Bear Market Double Top Close Up
click chart to enlarge
Chart 2 is the up to date ES-SpotV chart on ProfitSource. As you can see the prices did come down off the double top and there was some profitable short trading. But somewhere between the 50% and 75% milestones for the double top things started to look wrong.
Chart 2 – E-mini Bear Market Double Top Close Up Follow-up
click chart to enlarge
The next chart has us looking at the picture I was facing after the close of trade 31 August in the U.S. We now had a small triple bottom pattern on the bar chart. What was more telling was that on each of the days that formed the triple bottoms (labelled 1, 2 & 3) the volume was high. On the two days in between the volume was low, particularly on 30th August, which had a large range but very low volume. We spoke about this very thing on the morning of day 2 at the Interactive Trading Workshop in Brisbane.
Chart 3 – E-mini Triple Bottoms on the Daily Bar Chart
click chart to enlarge
It is not often that I write about Time by Degrees in this newsletter, however if I didn’t mention it here you would certainly not have anything close to the whole story. Time by Degrees in my trading plan, is my ‘best thing’ and that is the exact same sentiment of David Bowden. Chart 4 shows you that just how the late August triple bottoms on the E-mini S&P500 were 120 degrees from the April high and 90 degrees from the late May low.
Chart 4 – E-mini Triple Bottoms and Time by Degrees
click chart to enlarge
With all this evidence building against the short position and good profit from the way down, the hairs on the back of my neck where standing up. After getting back to the hotel at the end of day 2 of the workshop in Brisbane I had complete clarity. Get out of your short positions and get long! So in a move that is a little unusual for me, I closed out of short positions and opened long positions in a single move at 1,060. With the market now trading at over 1,120 this has proven to be a very good thing.
The big test is now is if the market can break through the June and early August highs, and if that happens, is it a genuine breaking of the highs or a false break. We are at a very exciting time and there are good pressure dates coming up in later in September.
I hope that I will catch up with a few of you at the some of the advanced workshops where we can discuss the market action as it occurs. Here I’ve had the chance to share with you some of the discussions we had at the Brisbane Interactive Trading Workshop as the market’s story was unfolding.
Until next month...
Noel Campbell
Professional Derivatives Trader
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