Wednesday, December 14, 2005

SPX - Patience bears

The market played almost exactly to my script yesterday. We moved up (did not gap up), came back retested 1276 on ES and shot higher. The daily and the hourly trend continues to be up. So the winning trades will be on the long side, until that trend reverses.

I admit this rally is long in the tooth and can reverse nastily anytime. So swing trading on the longside is a risky proposition. One can make 20 points on SPX and give it all back in a day. Or worse enter at the top and lose big money. Best strategy is to wait for good 15-min or 30-min setups and daytrade the market with tight stops in the direction of the hourly trend. For instance today on YM, at 10920 there was a good 15-min momentum buy setup, the 15-min EMAs were pointed up and it required a 13 point stop. Took it and traded for a 50 point profit (almost 1:4 risk/reward).

There were inter-market divergences today between NDX and SPX/DOW - warning signs that a top is getting close. As for the targets, i still beleive SPX 1285-1290 is in the cards.

I cannot provide the signals from my system for entries and exits, as that would constitute buy/sell advice. But i will try to post the Daily and hourly trend/momentum and trend turns as i get signals from my system. My goal for this blog is to continually remind myself of the underlying trend and at the same time share it with others. Comments are always appreciated and if you have any ideas or analysis you would like to share with me, e-mail me at nav-ta@hotmail.com.

No comments: