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Generally speaking, swing traders are placing low probability bets in being aggressively long with a declining 200-day moving average, especially when individual charts are not flashing enticing setups. Currently, the 200 day moving average on the S&P 500 Index is still sloping down, as I have been noting on my daily video recaps. That has been one of several other reasons why I have stayed in heavy cash at various times over the past few months. Of course, the question then becomes,”Why not aggressively short?” The answer is that we are still siting on the fence right now as to whether we are in a bear or bull market, cyclically speaking, as we muddle along. Again, this is all the more reason why high levels of cash are sometimes necessary and appropriate. Please read this post for more on the subject.
In the short-term, I am looking at 1225-1230 closely on the S&P. Above there, and I will consider putting on longs. Recall that after we sold off in the early part of this past week that zone turned into resistance, including some nasty morning gaps higher that were faded. Above that level, and I am willing to quickly look to gain some long exposure. As long as we stay below it and churn, though, I see little value in risking dollars to try to grind out a few low probability pennies. This morning, the market once agains found sellers up there.
Awesome. Learn so much from your perspective.