Welcome back to the daily analysis. As you may already know if you read my posts regularly, I have exams this week and therefore the daily Analysis is going to be a bit shorter. It will get back to normal on Friday though.
Alright, let’s get into the action a little bit before I have to go back and study some more –
$SPY almost closed green today making it (I think 21 in a row) – but it did not. That and this phenomenon is not really important though. What really matters is the how and what we are looking like now and going into tomorrow. Well, needless to say we are still in a very choppy, difficult environment. Breakouts continue to fail left and right and momentum wanes quickly! What do you do about this? Well, I do not know about you but I will tell you (quickly) what I do about it.
One thing is I take profits quicker – when the breakout occurs, it just about time to take it off rather than add to it. I also play the range but I am not as comfortable doing this. What I mean by this is I buy it when we are done a chunk and then sell it into strength. I know momentum players will disagree with that and as a primary momo player I understand but the circumstances right now warrant a little different approach.
How do I know when it is all over and I can go back to ‘regular’ trading?
It will likely end in two ways – a potent down move out of the channel/range and then we will get momentum back.
We chop around and until I start seeing alot of solid chart patterns develop it will likely continue or you could think about it like until we start to see follow through on breakouts unlike right now (see $EA, $ATVI as two recent failed breakouts).
This is how I plan on dealing with this new market. Play the extreme range and take breakout profits quickly!
That is all I got for today. Will be back tomorrow and I will be fully back on Friday. Have a good evening.