Near term and Intermediate term views have changed

I have written before (I think it was still in the email days) about what I strive to become as a trader. I strive to trade in the same manner I play poker. In poker I have no preconceived notion as to who is going to win a hand before the cards are dealt. I wait until cards are shown, bets are placed and players react to the process. I then use this information to guess at who has the best hand and if I can beat them or bluff them out.

This is how I want to evolve as a trader. Approach each day and week with no preconceived notions on how the market will move. I want to react to price and volume changes as they reveal themselves. I believe I am making strides, but have a ways to go.

A case in point is the current market situation. The facts showed me for weeks that the rally was stalling. Price appreciation slowed. Most indicators were showing exhaustion to the upside for several weeks. And thus I was short the market. Then on Monday prices rose, alot. I flipped my near term and IT views on the market at that moment.

Why? It became obvious that the prior 3 weeks were in fact NOT a topping process, but a basing process. Was this obvious before Monday's rally? I don't think so.

What became clear was that this move up was not over. We have another leg up to complete this move and Monday was just the beginning of it. It is my view now that near term we will hit prices near or over 950 SPX. I am playing this long. From here the most likely IT move is a retrace of 38% of the move off the bottom. If we top near 950 this would put us in the 850 area. This makes sense. We put in a very solid base in this area. It will take major bearishness to break it. We most likely will not get this bearishness for months.

After this shallow retrace we will being another leg up that takes us up over 1050. This could end this bear rally or we could get yet another leg down and another final leg up over 1100. If this bull ends with one more major leg up ti should go into the fall before ending. If we get a third major leg up (two more after the current leg) it should last into the end of the year and we'd begin the next bear market in Jan 2010 roughly.