Here Comes Jack The Ripper

David Frost // Market Outlook


August 12  

Today the bears put in a feeble attempt at a down day, but only managed a marginal finish.

In reality the volume was light, the session was boring and the reason is options expiration week.

Right on Que the big banks and institutions are beginning to have their way with the market as well as a plethora of stocks, and will do so for the next couple of days.

If my market intuition is correct, tomorrow (Wednesday) should be one of those melt up days that gets all the talking heads giddy as can be.  All in all, the heavy hands may “rip the market higher” and keep it there all day.

If you look back each and every month, during the week of options expiration, you’ll notice a lot of back and forth action for no reason in the market.  This is that week.

There is a handful of economic news on the calendar tomorrow as well as a couple of Fed Governors speaking, et al.

If the market is up, you’ll hear reasons like “retail sales were better than expected” or “inflation is on target” coming from the Fed.

(My vote is for Retail Sales which is announced at 8:30 AM EST.  If I was writing the script for tomorrow it would sound like this.  “Retail sales were better than expected and therefore, we see a pickup in the second half of the year.  This could be the narrative for the entire day while the market melts upward – right to the exact number I point out in the video)

It’s all nonsense.

The market will go higher in an effort to complete the corrective rally that always follows the actual correction.

Most people would like you to believe the markets are totally random and unpredictable.  Those people only believe that because they don’t yet realize their wrong.  They most likely never will.

If you’ve been watching the daily analysis videos, then you know by know the markets are predictable to a degree, and have seen me identify the top (pretty close) and also the most recent low (very close).

The markets have wonderful symmetry and repeat the same patterns over and over again.  Those two things along with several of the other tools allow us to at least provide very high probability trade setups and overall market direction.

It never ceases to amaze me why more people don’t take the time to notice the obvious.

For example, today a trade alert went out to the members.

The reason this trade was identified was the high probability in the pattern that emerged during today’s trading session.

The equity made a slightly lower low (at the low of the chart), reversed higher on heavy volume and finished positive on the day.

If your not interested in being observant, you wouldn’t think anything of this equity, other than it seemed to be going down and all the news was negative.

But if you took the time to realize that about 9 out of 10 times when those same characteristics occur, indicating a reversal pattern, the equity heads higher and catches everyone by surprise.

There are many patterns just like this that repeat over and over again.

It’s not a coincidence.  It’s common sense technical and market analysis.

More in today’s video?

About the Author

Trading and investing in markets is second nature to some, but a mystery to others. The goal is to provide a forum where everyday people aspiring to be part time or full time traders will learn how view markets differently and profit beyond their wildest dreams.

David Frost