Bing! Intraday again we’ve caught a substantial move on the ground floor, meanwhile swing trade entries from last week and earlier in this current rally continue to perform.
ES / S&P 500 have finally joined the YM / Dow 30 index in pushing into the uppermost trading range – regular readers will recall that early in 2005 we got short the market both at a failure of the top of this range and also as price left the bottom of the uppermost trading range, which is by definition a change of trend.
Now that price has regained the uppermost trading range (shaded areas) the plainly obvious target for both these markets is the 2005 highs and the world will be watching. NYA (NYSE Composite pushed through its 2005 high yesterday and is so far continuing that move into new multi-year highs.
NQ / Nasdaq 100 remains the laggard, yet lately it has been a trading vehicle of choice as it presents the largest percentage-gain potential—today up almost three times on a percentage basis as compared to the broader US markets. Today price has reached the substantial resistance where sellers last came out in force on January 19th; if NQ can push through this level and hold then it too stands a reasonably good chance at revisiting the highs of 2005.
Danger or Opportunity?
We can never be sure how long a move will continue, but we do know how to evaluate when a move has started and ended. When the time comes to reverse positions and be more short than long, we’ll know.
For the time being, price points up. We should single out weak performers and consider taking profits (or narrowing losses by exiting such positions if they happen to be on a failing bounce). We should consider taking profits on part of other positions on any singificant intraday failure, but not bail such positions outright unless there is a confirmation of market failure on the daily charts.
Our approach should be to maximize gains by letting working positions run, and if we have any past mistakes to clean up, use these rallies to improve our portfolio by exiting into strength rather than letting mistakes weaken when markets do pause significantly or reverse.
We know where the major targets are, and where sellers may come back again. For now our principle job is to manage existing positions.
05.02.15 12:03 #