I don't know whether there's an equivalent term in the US, but in the UK the term beer goggles describes the process whereby drinking a sufficiently large amount of alcohol can magically transform otherwise uninteresting members of the opposite sex into interesting and highly attractive people. The effect is temporary, but can be very strong.
Yesterday I suffered from a related condition called bear goggles.
This is the process whereby a support break suggesting a seemingly imminent strong decline can transform otherwise uninteresting trade setups into compelling and highly lucrative investment opportunities. The effect is also temporary and sadly does not extend to these trades being profitable. I had a good day overall but it should have been a really very good day had I not fallen into the bear goggles trap of ignoring the well signaled intraday long setup on ES because the main decline must surely be imminent.That I consequently became irritated and went flat early to also miss the well signaled pre-close decline was a reminder that trading should always be done coolly and objectively.
In part this is because I have one day of trading left before I go on holiday and having been lovingly tracing the setups for a retracement from here for a couple of weeks now, it's increasingly likely both that this retracement may well happen, and that when it does, it may well happen while I'm away in the land the internet forgot. That's life.
On to the markets where there were some very significant breaks down yesterday. NYA and INDU are still hanging tough, though also showing the very strong negative 60min RSI divergence that can be seen across all the main US equity indices. RUT, NDX, COMPQ and WLSH had already broken down from their patterns from the June low of course, and both TRAN and SPXEW also broke down from their rising wedges yesterday.
What of SPX? Well the low just before the close was an almost perfect touch of rising wedge support from the June low, and if we now see that rising wedge break, the retracement I've been looking for should be in progress. Short term however SPX could obviously bounce at wedge support and wedge resistance is now in the 1710-5 area. As I showed yesterday the ideal target on SPX would be somewhere in the 1645-55 area, and I mentioned a possible path via an H&S forming at a candidate neckline in the 1672 area. SPX 60min chart:
When we see that break on SPX, possibly the best looking short setup on the equity indices will be on TRAN, where the obvious target is at 61.8% fib retracement of the move up from the June low rather than the 38.2% fib retracement moves that seem likely on SPX and WLSH. TRAN 60min chart:
On other markets my GC (gold futures) short setup broke up yesterday, and that was bullish.
This trade was a decent winner for me in any case as I shorted down to 1328.1, exited at the clear short term low there and then waited for another short entry that never came, but I was disappointed that a setup with a possible 180 handle drop melted away. I have one remaining short term bearish option on gold and that is the equivalent declining channel on the RTH (real trading hours) $GOLD chart. If that breaks up then the next obvious target would be the 150 DMA, currently in the 1500 area. I'm watching this carefully but in the meantime would note the increasing negative divergence on the GC 60min RSI. This could still break either way. Gold daily chart from 2008: