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On a long
term basis:
1. The trend is still a
down trend. All three moving averages, the 21, 50 and 200, are all trending
down.
2. The market might
swing to the other side of the down trending channel.
On a shorter
term basis:
1. We broke above the
1500 resistance level and closed strong on Friday.
2. The 21 and 50 moving
averages are now trending up.
3. If the market does
not reverse itself on Monday, we are in for a short term up trend.
4. The other side of the
channel is at 1530, so only 20 points away.
5. Any move beyond that
will take a lot more setting up.
The down
trend is going into a profit taking mode, which makes the short term go into
an up trend. This is a natural reaction of the market after being in a major
down trend since the beginning of May.
Talking
heads on TV can blame the three months down trend as a result of the 19 day
conflict in the middle east, but I think the math may be wrong. They may
credit the 24 hour cease fire with the market going up now, but it stopped
going down on the 18th, which is two weeks ago.
My point is
that I don't think the market really cares about the conflict. The situation
in the middle east is not a new thing, it is a constant risk for the market
that is already factored in. The market does not react step by step to every
move out there. They assume its a powder keg waiting to blow up.
You can
listen to talking heads on TV, or you can listen to the market. The market
always wins and is always smarter. Make sure that you stay open minded and
trade what you see, not what you think or the talking heads think. Follow the
market, not anyone else.
We are
trading very short term on the long side right now in order to take advantage
of the short term up trend that may be developing here. If it fails, we will
rejoin the long term down trend that is still on.
Hope this helps,
Shay Horowitz - ShogunTrading
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