Just when we thought the tease was off the market, back it came. I am feeling so unsatisfied these days. So what does this teasing mean? It means that we are in a trading range of some unknown duration. We came off the January lows, fell back a bit, and now the market is trying to decide what to do. Clearly there is a debate going on between the buyers and sellers as they take turns moving the market.
The good news is that while this tug-o-war is going on our long term and moderate momentum indicators continue to strengthen. For the long term indicator we have moved into the calm water, we have a lot of our equities with wind at their back. The broad indexes, however, continue to lag, although they are improving. Its a muddled picture that needs to get resolved soon if you are a fan of the long side. You see, while we may be in calmer waters, we need to keep moving and get out of the neutral zone to having the wind at our back. For sailors and traders calm waters may be relaxing for awhile, but they don't get you anywhere - we need some Tradewinds!!
So if we stay in this back and forth for much longer, our long and moderate momentum will start to erode. What do we do with this information? If you are playing the market, the long side is the place to be, but take quick profits and solid stops (if you use them - I know I said yesterday to loosen stops, but this market is jerking us around). If your cup of tea is on the short side, you can keep a watchful eye out, your day may not be far away.
You notice that I don't use a lot of technical analysis language or charts. I figure most of you look at that stuff and don't need me to comment on it. Its easy to look at the chart of a major index today and see the obvious short term support and resistance points. Watch those to see which way this indecision is resolved. Our momentum indicators as of today are suggesting that it will be resolved to the long side, but we know that the market makes the final decision.
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2 comments:
you mean to the long side without retesting Jan's lows? Thank you for your post, appreciate it a lot.
As you have gathered by now, I try to keep the analysis of the market's behavior simple. So I am not going to say that this low or that high needs to be taken out before this happens. Ultimately I don't really care, I want to see a trending market, with either higher highs or lower lows. For the short term, we are not getting that while our momentum indicators are gradually improving to the long side. We have to get out of this mini-range to the long side to take advantage of that momentum. The odds today favor to the long side, but the market could change that at any time.
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