Ideal Area to Get Shorter with Mouthwash Strategy

This Fridays Jobs report usually provides some market fireworks, as Traders typically over-react to government data that is continuously “revised.” Often a big move in the pre-market futures is reversed during the same day or within a few days. My hope is the report sends the pre-market futures into the area highlighted on the first chart below. Previously, this area was major support, and could now act as resistance. We will see.

Click on Charts for Full Size

 
 
 
 
 
 
 


As posted on Tuesday ( Mouthwash Post ) the Strategy based on the proprietary market breadth indicator (AKA “Mouthwash Indicator”) fired off a Short Signal and I took a partial Short position. I missed getting filled on my second scale-in by .30 cents on Wednesday. (The strategy does up to 3 scale-ins at volatility based levels) A jobs report move tomorrow into those levels would be an even better place to add to my short. When a super reliable indicator and strategy coincide with a key technical level, it is an ideal set up.

Which ever way the market reacts tomorrow, I will exit on either a volatility based target, a volatility based stop, a close below the 8 day moving average or Time Stop. (Thursday the 11th). However, I would like to accumulate a bigger position before one of those happens. The Highlighted area would be ideal.

In a different time frame, I was looking at some monthly charts trying to get a sense of where we might be headed on a longer term perspective. I found some interesting parallels with the 1970’s on the charts below. My hunch is we are in for a stagnant market for a multi year period. Time will tell. In the meantime…

Good Trading,
KW