S&P 500 Daily Report For 12-21-2015

Note As we prepare for the upcoming Intensives new

clients are being added to the distribution list.
Occasionally we will be referring to something from a
previous report. All reports are posted at the Intensive
site, training.jdaltontrading.com, on the Calendar at the
Dashboard page or on the right rail (see left graphic).

The yellow line represents an area we identified as “thin” two weeks ago. The thinness
was created as a result of a fast market break. Thin areas always have to be viewed
contextually. A thin area occurring at a recent market high or low may represent
acceleration as a new, young auction g gets
ets underway. When thin areas occur within a
trading range the odds are always good that the range represented by the thinness is
retraced. Over time the thinness fills in representing a more normal distribution.
Confession Consider doing as I suggest not always as I do. Two suggestions:
1. Day traders should stay fully involved in the day at hand. Attempting to trade as
you are in and out causes you to miss important information relevant to the
ongoing, continuous, two-way auction process.

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 2. Always
2. keep your keep
Always longer-term
term
your chart(s) within
longer-term
longer
view.within
chart(s) Too many view.day
Tootraders become
many day too
traders
narrowly focused upon the very
become too narrowly focused upon the very tinytiny short-term
short
ticks.
short-term
termI actually made anmade
ticks. I actually interesting
an interesting
interestin
observation,
observation, whilewhile
I wasI was focusing
focusing on the
on the veryvery
tiny
tiny short-term
short-term term
ticks, ticks,will
s, which which will be reviewed
be reviewed below;
below an
observation that contributed to my lack of left
below. My y lack of full market attention full me
vulnerable
market attention.to being too narrowly-focused.
narrowly

I was preparing for a move on Friday talking to the

packers and telling them what went to storage and
what went to the new location.. Clearly
C I was not
paying full attention. Of course I knew that with my
mastery I would be just fine.
In the process I failed to fully review the longer-
longer
term chart or to keep the chart in front of me.
Additionally, the longer-term
term view (it wasn’t even
that much longer) wasn’t even en covered sufficiently
via Friday’s daily report.
Missed big opportunity The market retraced the
remainder of the thin area before the end of the
session. The significance of thin ranges is that
they lack “congestion” areas, which I also refer to
as backing and filling. Congestion
ongestion areas will often
act as elevator stops if a market begins to break
or advance. Without these elevators stops,
stops price
will often move very quickly through these
t areas.
The coming week I don’t know what will happen
as Monday opens; however, the area
incorporating Friday’s range is still classified as
a
“thin”. Please carry this information forward as an
area to monitor.
Friday:

1. Was quadruple witching which can easily

create unusual market behavior. This was
likely exacerbated on Friday as it is nearing
year-end
end and the time remaining for
managers to take losses so that existing
positions won’t show in year-end
end portfolios.
Additionally, as discussed above, wew were
trading within a “thin range”.

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 2. One of the remaining days for regular
regular-way sales. This may have contributed to
downward pressure as there is a tendency for institutions to sell poorly
performing positions so investors won’t become
me focused upon them as they
review year-end
end portfolios.
Monday The spike rule e is in play for Monday morning. SSpikes by definition occur late in
the trading session.. Because the spike occurs late in the session it is difficult to know if the
spike has been accepted or reject
rejected:
1. Staying within the spike is negative as the spike is being accepted.
2. Opening below the spike is also negative as the message is that prices haven’t
gone low enough to cut off the selling.
3. Opening above the top of the spike is positive as prices have been rejected as
too low and unfair to the seller.
4. The top of the spike is resistance in the classical sense.
The next lower reference
ence below the spike is 1983.25 — see lower graphic.

We will update you on Monday morning via the Morning Report and the webinar starting at
9 am ET.

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 Single Most important Observation
from Friday
2013.75 was halfback as G period ended.
Halfback
back is a standard reference
employed by day y and some short-term
short
traders. J and K periods rallied to just
slightly above halfback. My observations:
1. Trading back a tick or two from
halfback is a sign that day
timeframe traders are
dominating and are being very
exacting. This
his is a weak
reference
rence because of its
exactness. Longer
onger-term ‘sticky’
money has no idea where this t
reference is nor do they care.
Day traders s getting short at this
level are increasing the short-
term short inventory and the
potential for a short covering
rally.
2. J period opened and printed a
couple of ticks shy of halfback
(making the price action at
halfback weak) and broke a few
handles. J period then rallied

and took out halfback by three ticks and proceeded back down.
2. K period traded through half
halfback and failed; it was unable to take the J period
high. This
his was the reference that I took my clue from and provided the
confirmation that the J period rally high was the upside failure above halfback.
The subtlety of the above will be elaborated on during Monday morning’s webinar. You
can register for the webinar here or at jdaltontrading.com under Resources – Webinars –
Upcoming Webinars.