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Wednesday, November 9, 2011

Hairpin Turns

Gaps up, gaps down; bear traps, bull traps: getting any significant follow-through or clear signals in the current news-driven market has been an elusive pursuit, at best. In disorganized trading environments, less is more -- if you are trading, consider cutting your position size, stepping up risk management methods, and exercising patience while the recent pandemonium gets sorted out. There have been good trading opportunities in both directions, but taking advantage of them has often required quick responses and steely nerves. Profitable scalps have been plentiful for those trading shorter time frames, while buying the dips and taking at least partial profits on the rallies has benefited swing traders. The sidelines offer safety for those suffering whiplash or with less experience in volatile conditions as well as an excellent vantage point for evaluating the action and compiling a watch list to consider putting to work upon confirmation of a more sustainable trend.

With futures down sharply in overnight trading, the /ES has retraced to an initial support level to keep an eye on today. Note that a pre-market bounce off both a lower channel line and Fibonacci retracement level may prove to be significant in the very near-term, at least.

Trade well,

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