Really nice post, Mike. Thank you. I hope you'll find good and beneficial reasons to hang out with us a spell.

Indeed your comments and observations are clearly valid and show a nice understanding of a portion of the market dynamic. Equally as valid are some significant fundamental items that raised their hands as explanation for the torrid action of Thursday and Friday last week. Also, there were many buy stops just below 8540 from those betting long on the turn at 8550 as well as those shorts eyeing 8540 as the "most likely" end point of the run ... just as we were. Also there was a good bit of short term fund buying at that level as well. So we had no shortage of factors explaining the run up on Thursday.

Why did so many not see it in time to get something done? Why didn't the fundamental guys get their share? Why did so many shorts bail near the end of day on Thursday giving back huge portions of their gain? All of the reasons were there and valid. What do these approaches share in common? The complexity of recognizing them and an inherent disability to generate sufficient confidence and conviction to do something with it, that's what.

Now go look at the chart, mark all the super strong S&R levels that existed on the daily and weekly chart in the day or days prior to 3/30. There is a ton of evidence to support huge confidence the run south would dry up somewhere between 8550 and 8540. "WHAT'S MOST LIKELY?" (my tombstone epitaph) being the operative question. So much confidence in fact that rolling a stop super tight on your short trade or an outright exit once it broke below 8550 was an inescapable conclusion as was the decision to buy the CD as it broke back above 8650 or certainly 8560.

For my money there is no better way to trade these markets than to use S&R to PREDETERMINE the price levels at which you WILL trade. Trying to draw conclusions about market direction as price is flowing is a much inferior approach and an infinitely tougher road to hoe. This is just another exhibit on the evidence table to support my contention ... Easier, more confidant, less risk allocation trading comes with PREDETERMINING you trades. It's like having a scripted playbook when you step on the field to start the game.