As I sit here today watching the price action develop in the market, the image that comes to mind is one of 2 guys in a fight … One guy is very big, very solid, pretty strong and under normal conditions wins the majority of the fights.
The other guy is not quite as big but is very strong and more agile than the first. Under normal conditions he can hold his own against the first guy, but generally doesn’t beat him.
But what about when the conditions change?
Now imagine that the first guy is standing on a bit of a slippery slope. Some of the strength that he normally brings to the fight has to be used just to keep his balance on this slope. And the second guy? He’s on solid ground and has firm footing to back up his strength and agility.
Which one do you bet on?
That’s the scene that’s been playing out for me in the S&P 500 as I watch the daily and 4hr charts of the Emini ES. Been saying it for a few days now that I’m neutral. I have conflicting information and for me the two of them are in a bit of a battle.
Could I place a bet on one or the other? Sure, but in these conditions I better know how much I’m risking and be willing to take the stop.
Which way are you betting? With the big guy who wins most of the time … or with the other one who just might find some advantage in these conditions?
Me? I’m keeping an eye on the edges … playing at the ropes back towards the middle, with a lot more caution until I see which guy breaks.
