This morning the short-term model on the S&P 500 was nearly oversold around the time the the gap at 88.50 was filled that I mentioned last post. The trade was outstandingly profitable at that point. However, there was a huge reversal today in very high volume making the trade only slightly profitable.
My suggestion for anyone with actual money in this trade is to place a stop loss at 92.00 which was just above the opening price yesterday and should create a "breakeven" trade if the markets rise tomorrow. As for following the trade, I will continue to wait for the model to make its next oversold signal before posting the exit price.
This is a difficult market to make accurate judgements on a day like this. Normally a 4% up day in higher volume coming off a potential market bottom would be a clear "follow-through" day like I've mentioned in prior posts. However, 4% is a pretty average to low % gain considering recent up and down price swings in the market. Also, a potential follow-through day should usually show some stocks breaking out of consolidation patterns. That is not really the case right now as there is no real market leadership and stocks are broadly damaged with few forming any legitimate basing patterns.
If I had to pick one direction for the market over the next few weeks, from the price charts I would say up.......but I really don't trust buying right now. Again, if the market can make legitimate headway, and then make another oversold signal at a higher level, I would strongly consider recommending a bullish ETF trade.
Pete
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment