the week ahead trading in the present tense with an eye on the future successful day trading is mentally challenging the biggest challenge for many of us is recognizing that the underlying structure has deteriorated or is in the process of deteriorating this is like trading on very thin ice yet lagered momentum Traders focusing only on price continue to advance price without realizing the risk that they're assuming this is your like driving your car or your motorcycle looking only Straight Ahead two weeks ago in the week ahead I wrote that the odds of retracing the range from the previous week were very high that didn't happen Why didn't it happen because the momentum Traders continued to take the market higher last week I wrote that the way to protect yourself from these pronouncements I.E when I was wrong or it didn't turn out as soon as expected is to focus on developing value value represents what is occurring right now during the past week the previous week and a lot large portion of the prior week were retraced the odds caught up with the market we have consistently spoken and written about two observations one there is often less risk in being a little late rather than striving to be early when momentum markets become too enthusiastic which is the second thing we write about it often takes a catalyst to get Traders attention last week's Catalyst was Traders nervousness relative to some of the rhetoric coming out of the Republican National Convention in the following graphic you can observe two closely aligned days with no excess excess is one of the most important elements of Market generated information the lack of excess heavily influenced my observation that the odds that the odds of retracement were high the retracement finally came however it was a week later then initially written about part of successful trading is one understanding what is going on and secondly having the patience to let it work out when the market advances without following an ex without following an excess low it often indicates that the buying comes from very very late lagered momentum Traders we often refer to these as weak hands buyers the following graphic shows the Gap 5500 level which is the next lower support level the trading uh issue is whether the Market finds acceptance or gets rejected relative to the 5500 level SL gap on a longer term basis I suspect that we are currently witnessing a liquidating break rather than a fullscale route this comment is based on the current High lack of immediate aggressive selling selling got underway slowly and from there sometimes markets must break before they continue to increase as short-term inventory has become extremely high under the current situations we talked about the importance of excess whether this Market continues or gives us an excess low is what you want to focus on as I said earlier the immediate Focus will be the 5500 level which was also the gap good trading have a great week