Check out the longer term S&P trend here:
I made a bullish call when looking at the short trend term trend in consideration of this chart, from this post.
Look at the bigger picture. Longer term, we are still in a downtrend. My trading system (which I'm still developing) would state:
- On a short term to stay bullish since we're hitting resistance on the bottom of a recent channel, and we've had no evidence of losing that trend. There was some selling on friday, but on very light volume. Bet with the trend, get long.
- On a longer term, get short pretty soon. We're at the top of a long term channel, as well as sitting at some strong resistance. There's going to be a good amount of congestion to any upside, anyways.
- The Textbook even states that there is no "mechanical” index or combination of indexes which will always, automatically, without ever failing or going wrong, give warning of a change in trend; "such, in our experience, are often confusing and sometimes downright deceptive at a most critical juncture."" pg 9
I expect the market to break down from this top channel, as the stronger, over-riding trend. Fundamentals haven't changed (or at least, haven't changed for the better). Yet, we've just seen one hell of a rally.
I'm changing my outlook to monday to NEUTRAL. I will get rid of my long position and see what happens. If we bounce down again, I'll reconsider each time frame and make my decision from there.
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