Wednesday after the Close we brought our traders into our training room and started talking about a game plan above SPY 134.  A profitable trader is first a prepared trader.  The market was consolidating close to this level.  Above and the market might run.

Towards the conclusion of our meeting I asked all of our traders to send to each other a few ideas of stocks and prices if SPY found its way above 134.  We walked into a market gaping above this important level Thursday AM and we continued higher.

We are not fundamental analysts but as traders we can develop a feel for how markets might trade based on fundamentals.  My feel was we were gonna run above 134 at least once before the end of the week and I wanted our guys prepared for that.  But my sense was we would not see a run that was too crazy.  Why?

1) Earnings season is about to hit and many would not want to commit until they see some leading companies report.

2) The jobs number on Friday.

3) We have come a long way of late after we broke above SPY 130.

4) We are in a low volume summer trading mood.

5) There are some overhangs to give us pause like Greece and Portugal and a potential spillover to neighboring countries.

6) This lack of a resolution on  the debt ceiling thing has got to give some traders pause to be fully committed.

7) Our highs are very close above 134 SPY.

“Price is the only thing that pays,” says @alphatrends and he is so correct.  If the market had held above yesterday’s highs as a trader my job would have been to get long.  But as we gain experience we can make sense of the market and its patterns.  And we can get a feel and develop a bias for what is most likely to happen.  First we must learn to think like a professional trader and gain some screen time with set ups like this week.

So we sit watching the price action above and below 134 SPY.  Always ready for next significant move.  Always most concerned with thinking like a professional trader.

Mike Bellafiore

Author, One Good Trade