Now, an army may be likened to water, for just as flowing water avoids the heights and hastens to the lowlands, so an army should avoid strength and strike weakness. And as water shapes its flow in accordance with the ground, so an army manages its victory in accordance with the situation of the enemy. And as water has no constant form, there are in warfare no constant conditions. Thus, one able to win the victory by modifying his tactics in accordance with the enemy situation may be said to be divine. -- FromIn trading, as in war, you must be selective in waging battle. Most of the time, you should trade with the prevailing trend. But when you can detect chinks in the armor of an upside move, that's the time to "capture booty" by taking partial profits, or to launch trades against the main trend, striking at weakness to the main force. Here are the signs of weakness I detect in December soybean oil (BOZ2:CBOT). As I've said before, multiple signals are stronger than any individual signal, and bean oil has shown signs of weakness in each of the past four sessions.
The Art of Warby Sun Tzu
- Last Friday, the market traced a double top, a well-known topping pattern. On Monday, the market traced an outside bar, engulfing the open and close of Friday's bar. On Tuesday, bean oil continued to show its desire to go lower by gapping away from the engulfing bar and failing to fill the morning gap. On Wednesday, the market did fill the previous day's gap, but not on a closing basis. Bean oil finished Wednesday at a six-day low, again engulfing the previous day's bar. Another simple sign indicating a break in the upside momentum were the multiple closes below the 10-day moving average: For the third straight session, bean oil finished below this line Wednesday.
Steak and Juice
Looking at LevelsA few other markets that have been in recent uptrends are now pulling back and displaying tight clusters of support that may provide long entry opportunities.
- For October crude oil (CLV2:NYMEX), 27.65, 27.05 and 26.50 stand out. In October unleaded gasoline (HUV2:NYMEX), 0.7603 and 0.7490 loom. September S&Ps (SPU2:CME) have a tight level at 896.50 to 898.50.