The study of price action for me is an evolving art form. My abilities are continuously evolving as a result of consistent practice. I can’t compare the price analyst I am now to what I was 5, 10 or 15 years ago. Every period is worlds apart in terms of ability and aptitude.
With time comes certain discoveries. One of my more recent findings is the ability for certain averages to take on more importance for the market at different times of a bull or bear cycle. For a period of weeks it could be the Russell that takes on the primary leadership role. For another period of weeks it can then become the duty of financials. The next few weeks it will be the SOX.
The most important part of this cyclicality within the leadership of the market is the fact that, more often than not, these periods of cyclical leadership are dictated by proximity to important trajectory points. This is something I am just beginning to grasp. The day will come when I have a firm understanding of it. For the time being, it is more abstract in nature than anything else.
Here is an example of it in action. The SOX is the current leader of the entire market based on the launch from the important trajectory that marked the bottom in July. The recent response to resistance tells me that the market, as a whole, requires more time before taking on the significant resistance ahead:
click chart to enlarge