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In my video market recap on Friday, I discussed the concept of viewing major support zones as mattresses, rather than placing an entire bull or bear thesis on one specific print as though it were a New York City concrete sidewalk. Indeed, the senior indices, as well as many individual issues, may very well lean into their respective mattresses come Monday, but that does not necessarily mean that all is lost and a new bear is upon us. Despite sentiment becoming understandably negative after six consecutive weeks lower, the high probability play is to take a stand early next week and buy any further weakness for a short/intermediate-term trade. After all, we are still dealing with rising 200 day moving averages across the board (indicative of a continued cyclical bull), and a virtual straight line down is highly likely to see smart money bears covering their shorts either this past Friday or first thing Monday morning.
Thus, it makes sense to take a look at a few examples of charts that are leaning into their respective “mattresses” of major support.
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Good analogy
I dont have to wipe everyone out, only my enemies.
Good stuff Chess. Inflection point time is here for sure.
well said Chess.
I find a lot of traders will say something along the lines of “50 DMA didn’t hold, so I sold.” Or, “support broken, have to sell.” Their entire thesis for a trade is based on having a line in the sand and if it’s crossed at all in any way, then you have to sell, when in fact those breaks are often some of the best places to get into the trade. It’s all well and good to have clear exit strategies, but often times you need to let things breathe around major support/resistance areas. Of course if it ends up being a loser, you do lose a little more. But it will keep you in more trades that end up turning around in that area, rather than right on a dime.
Maintaining and understanding proper context is a serious concept not many ever talk about. Chess’ use of it as a foundation in his posts is beyond important. The natural tendency (read: bad habit) is to draw these rigid hypercritical lines in the sand… but, looking at certain lines and areas as mattresses is a great visual aide not to be so dogmatic. Rare gem this ‘mattress’.
Bravo Chess.
What they said. Great concept indeud.