We have the Fulcrum (Piece # M24) but deeper correction (up) is needed to look for an entry point. So I expect it to move higher before forming a good short signal. Otherwise, if the Fulcrum is broken a short pull-back could present a good entry point.
My short-term COT pattern appeared this week in Sugar. This time the pattern signalled for a possible move to the downside.
That is backed by the Seasonal indicator (blue line, courtesy of Larry Williams) which shows that we are in a period when decline can be expected.
Here we can see something very interesting. Sugar reached the previous top (10/02/2019) with a large range day on a higher volume. With all this volume it could not break above that top. Also, after this failure, the next move up created a small divergence (red arrows) between the price and the On Balance Volume indicator (green line).
This can be interpreted as a distribution. That is why I'll be looking for signals to be short here. If on Monday the price breaks below Friday's low it will create a Spearhead sell pattern (Piece # M17).
The price must not go above that significant top.
My short-term COT pattern suggests an up move in Copper and the 2 Year Treasury Notes. However, the picture there is quite mixed. So I'll be watching them closely for now.
Cotton finally made the move we were expecting. Below is a screenshot of my position in it.
So what's next here?
The next step should be a test of 63.30 zone. After that comes the 62.00
I've moved my stop-loss lower. But still standing at a considerable distance from the current action. Let's see there will be an even bigger move here.
I have a pending order for E-mini Russell 2000 futures, pending order for E-mini S & P500. I have also bought a January Bull Call Spread on VIX.
Long story short, I'm still bullish on US Stocks but I also see some weaknesses. If continued, that weakness will be best shown in the Russell index, since it is the weakest of the major indices. But short-term trading means to accept that you can be wrong. Also, we have a strong uptrend. That's why there is a pending order to buy the S & P500 if it continues to go higher.
Those options express my expectation of more problems with the USMCA and the US-China deal. I find it hard to believe that after all that time we will see those deals signed before the end of the year.
Founder of Piece of Trading
Trades mentioned here are either taken or will be taken by the author if the right conditions appear. They are NOT recommendations nor any of this constitute investment advice. Please read the Risk Disclaimer
Seasonal indicators courtesy of Larry Williams, ireallytrade.com. Charts made with TradeStation®. tradestation.com
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