As we have been observing for a few weeks now, the 20 period weekly moving average is still signaling caution here. Not only is the reference point itself acting as resistance to price, as you can see on the weekly chart of the Nasdaq Composite Index below, but it is declining. That does not preclude the bulls continuing the progress they are making on the daily timeframe of higher highs and higher lows since the June 4th bottom. However, it does compel me to continue to stay relatively lightly invested on the long side until more progress is made.
When you look back to the weekly chart over the years, particularly since the March 2009 major bear market low, there is little doubt that most profits for technically-drive momentum swing traders come on the long side when the 20 period weekly moving average is clearly rising along with price on the major index charts. Until then, I will at least respect the notion that traps still abound.
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Thanks, Chess. Great post and great consistency here, which is what is needed in helping traders to live to trade another day. 12631 probably contains the highest percentage of traders who haven’t blown up their accounts this year, of any trading room on the Net. Good for you and RC for making that possible.
BTW, do you know if it’s still possible to start a blog on the IBC bloggers network. Or is that door close? If the door’s still open, where on the site are the instructions about how to start a blog?
Thanks, Frog. I appreciate it. Please see these link about joining the iBC Bloggers Network: here http://ibankcoin.com/wp-signup.php and here http://ibankcoin.com/ibcbn/2011/10/24/blogger-network-faqs/
Of course, some traders on 12631 have made great profits too. But even the newbies who would normally go 100% invested in their fave stocks, have been cautioned by you, Chess, not to do so during a correction. Those who have heeded your warnings have been left relatively unscathed during the big plunges.
Trading profitably is said by wise people to be not about having winners– We all have winners– but about how you manage your money, handle your losses etc. over time. I think they are right.
I like your 20 ma reference quite a lot. Also, from the cycle perspective, Monday will be day 34 of the 35 to 45 day daily cycle, so the move down into the low should be pretty sharp and maybe test 1300. Also the dollar appears to be at day 1 of its new daily cycle, which should pressure stocks as it moves upward. However, what the Clam may do at the next meeting may be a game changer. For now cash is a good place to be.
Hi Chess,
Great post as always. Question if you have a spare moment. KMP (Kinder Morgan Partners) has been acting strong since late June. What does your technical analysis show as the next resistance and support level? Thx.
Chess – nice post – still “thinking” there’s one leg left, but there are sure a lot of short opps out there suddenly – stocks making new highs and pulling back or breaking thru multi month floors. FWIW, there’s a Bradley date coming up at the end of the week