Market Winding Tighter In Range

Daily Continuous

Seems to me that this is starting to feel like a market that is winding its way to an issue. When I was a kid (few days ago) we used to have balsa woods plane that you would wind the rubber band up so tight and throw it in the air- releasing the rubber band to power the plane. This market is behaving the same way as the range gets tighter and tighter within the larger range — something is going to give. Whether the plane takes off or crashes into the lawn and the band breaks is unknown. Stick with the range trade but start to lighten up on selling premium.

Major Support: $2.47, $2.00, $1.991-$1.96, $1.795-$1.766
Minor Support $2.38-$2.26, $2.17
Major Resistance$2.83, $3.00, $3.536, 3.59

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Gap Open For Prices

Weekly Continuation

When the week started — prices gapped lower and never came close to closing the gap during the holiday week. Discussed the historical tendencies of price action around the holiday with the declines consistent. In some years the decline is severe, some modest, the average of the last ten is about 10%. After closing at $2.765, gap-piing lower on Monday/Tuesday when trading resumed. On Thursday, after trading to the week’s low of $2.500 the prompt reversed higher from support and registered a decline of 12.7% from the 08/31 high. Given that October continued to follow the recent trend on the technical script the guidance is that the trading range will likely continue through at least the remainder of October’s tenure.

The gap left on 09/05 remains open between $2.708 and $2.735, together with a trend line drawn from the August and pre – Labor Day highs will present formidable resistance just below the aforementioned June and July highs. Expect October to close that gap and test the trend line tested over the next couple of weeks. At least as often as not the post Labor Day low turns out to be the low for calendar September and October settles premium to its immediate predecessor (about 75% of the time).

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