Read this from a commenter on BillCara. I am posting it here for record for later analysis.
Stu: If I may..dont guess the market direction.!! Just trade with the trend between support and resistance zones. Let the market tell you direction...dont guess...trade with a 'no mind' (thats from the last samurai movie):). i.e.e dont think too much, think when you are doing your homework at night or pre-market, not during trading. Try This. On your monitor...put up 3 charts. 1) \$SPX 2) Breadth chart like \$ NYAD or \$NYSE advancing issues, add a 10period moving ave on a 3 or 5 min chart. 3) The chart of what you are trading, I guess the XLF. Before market moving events. take the \$SPX chart ..start with the weekly time frame . Draw all key resistance and support zones. the nearest resistance zone today was around \$spx 1385ish. Go to your dailies..nearest resistance..1380ish, go to a 5 day 5 minute chart, and draw a line connecting the two most prominent pivot lows. Hopefully the line extends as you trade, dont know your platform. That tells you resistance 1380ish, support 1350ish. No worries with market direction, or size of rate cut. Now you know 2 potential reversal points. now trade within it by following the trend of the rbeadth chart.if the breadth is trading above the 10moving average..go long. if below go short. if the 10 moving average is flat on the breadth chart..stay out..its likely to be a congestion zone.low reward to risk. FOMC announces...irrelevant..market direction matters ..follow your market breadth chart. The first reaction..look at your breadth chart dont look at prices. look at MARKET DIRECTION. 3 steps FOMC announcement..1)knee-jerk..2)counter knee jerk...then 3)trade direction . market trends up and reverses at \$SPX 1380 ish.which coincides with XLF reversal ( there is also a RSI bearish divergence, AND a long red bar).sell your UYG, go long SKF.... 2 large directional moves. Now you have your lines markng \$SPX resistance, the trendline from the last two lows, RSI bearish divergence on XLF and a red candlestick at resistance on the \$SPX..confirming exit LONG. Why isnt it just a pullback ?..the candlesticks stays below the 10EMA with 2 long cascading long bars( as opposed to inisde bars) .Layer your Short trades in. Stay in the trend as long as it stays below the 10 moveing ave...add to your position if any pullback does not cross the 10 move ave.. Sell at \$SPX support. I didnt..I got out at todays lows... I have a few other ETFs..they follow \$SPX support n Resistance...XLF is one of them. P/s It helps if you use candlestick reversal patterns . which is showing a reversal on the daily \$SPX..lets see what the market says tommorow.
Good luck ..this is a friendly tape for day traders...just stay out of congestion zones.
Posted by: EEMTRADER