We are looking at a slightly deeper giveback than yesterday’s mere gap-fill. At the same time, I continue to see plenty of individual stocks in the green today and acting well or consolidating mildly. So, what to make of it? Well, the zoomed-out 30-minute timeframe below of the SPY for the month of August indicates that the giveback has not been much to get worked up about yet. The huge gap higher from August 3rd remains intact, an the presumption with the overall uptrend is that buyers will step up to defend the $141 zone.
Rather than assuming that will happen, though, I prefer to use consolidations like these to study up on the best charts, as well as those firming up impressively. “Studying book,” as chess players call it, is something I did on a daily basis in poker as well. When it comes to trading and the market, there is always something to do, especially when you are not executing trades. The actual trading should seem like a rare event compared to all of the other work that should be put in.