www.scottpluschau.blogspot.com
Source: Up the stairs and out the window? (S&P 500):
There is an old saying that "the markets can climb a set of stairs and go out the window". A picture says a thousand words and the hourly chart left hand side below is a textbook set of stairs in the S&P 500.
(Click on chart to expand)
Looking at the market these past couple of days for me has felt like watching a movie where the actor/actress has to cross over an ancient rope bridge, with a gorge below, and is transferring their weight on the plank testing it so gingerly in an effort to cross over to the other side...
What has been repeated recently here is selling short without a reversal signal in my book is a mistake. There will be plenty of opportunities should a change in trend occur. There are valid reasons to be biased to the short side, such as "price volume divergence" on the Daily chart, but the path of least resistance is higher for now.
There are many locations to trail or tighten a stop for the long to protect their gains, but no chart based reason to exit that I have seen.
For the short trader, without a logical place for a stop loss they must use a stop based solely on an amount they can afford to lose. Or they must use no stop which is a recipe for disaster in a blowoff top type move or an exhaustion gap when the pain becomes unbearable with leverage. These are not the type of risk management/money management principles used with my methodology.
There are a few signals to enter short that I am patiently waiting for to develop, and if they don't show up, I still have my capital intact.
Only a couple more days to sign up for the next monthly issue of the swing/position trade service for February. It is only going to get more interesting from here. After February 1st, the subscription will be closed to new subscribers.
My last post with the weekly chart on the S&P 500 is here: http://scottpluschau.blogspot.com/2013/01/the-most-important-chart-in-world-is.html.
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