A bull or bear ‘trap’ is a very powerful formation in the BoP that indicates that the market will likely reverse the current day’s move the very next day.

A ‘bear trap’ is large space between the 1st column and a cell filled in on one of the 4th, 5th or 6th columns and nothing in between. When a ‘bear trap’ happens it generally means that the market will close higher the next day thereby ‘trapping the bears’.

Bear Trap

Here’s an example from the week of April 30th to May 4th 2018, and if you look for them there are many examples in the spreadsheet.

A ‘bear trap’ is large space between the 1st column and a cell filled in on one of the 4th, 5th or 6th columns and nothing in between (see Guide for additional details).

When a ‘bear trap’ happens it generally means that the market will close higher the next day thereby ‘trapping the bears’. If it happens on the bullish side of the BoP it’s a ‘bull trap’ and the market will generally close lower the next day thereby ‘trapping the bulls’.

We saw the bear trap twice this week with gains the next day of 64 points and 121 points on the NASDAQ.

Bull Trap

A ‘bull trap’ is large space between the 1st column and a cell filled in on one of the 4th, 5th or 6th columns and nothing in between. When a ‘bull trap’ happens it generally means that the market will close lower the next day thereby ‘trapping the bulls’.

We saw a bull trap twice in the example above with declines the next day of -178 points and -251 points on the DOW.

It’s a Market Timer setup we pay close attention to.