In the above chart, you can see the daily difference between the High and Low relative to the 0930 ET Open (Blue is H - O; Pink is O - L). This is a good way to see the short-term cycles. Notice how the H - O typically is below 10 points for two to three days before the market trends back to the upside.
Before the 0830 CPI report, I was anticipating an up day. However, the market reaction to the CPI report, and commentaries on CNBC started to make me think that the day was going to be a severe down day.
As soon as the market opened, we got indications that the market indeed wanted to go up as the short term cycle dictates that it should. However, my mind was still thinking down due to the CPI report, even though I have seen this type of reversal many times before. As it turned out, the market indeed trended up as it should, irregardless of the CPI and TV experts.
Lesson is to read the market rather than let external factors influence assumptions as to where the market should go.
Charles
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