$SPX for the week 6 Mar 2017
Newton’s first law of motion. An object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force. Sure feels that way in the U.S. equities market at the moment.
A gap has formed on the daily chart at ±2370, the first level of support, I suppose, as the past few weeks have shown little in the way of a breather, forming support levels. The first level of meaningful support is going to be at 2300, being a previous resistance level and the 50 day MA has risen to that level too. If there is a “deeper” pullback, (deeper in inverted commas because there has been very little in the way of a pullback) I would personally like to see it hold above this level and then move higher, a breather of sorts would be welcome, but I have no objection to seeing it carry on, however it will need some momentum to go higher.
Resistance levels — 2400 could still hold as a resistance level. As mentioned last week, if I were an analyst I have potential resistance at that level, but as a trader it is just another number and I continue to trade price.
Where does this leave me on my 3 trading methods:
Trend Following — I added to a few positions and continue trailing stops as price trades higher. I have not added any new stock positions, although I maintain my watch-list. It has been relatively easy to manage these positions and I will continue to do so until there is an unbalanced force that stops this “object” in motion. That is one of the keys to successful trend following, the old adage “cut losers short and let winners run”. When you have winners running, you have to resist the urge to take profits, rather trail stops and see how far it can go.
Mean Reversion — A good week for my mean reversion trades. The gap up gave a nice boost to the few new positions opened.
Swing — I opened a new long position in ILF, which is the first new position opened for many weeks. I missed a signal to go long EEM, not sure how I missed it, so I have to review my process. If I am happy with my system and have confidence in it, I must follow the process or the system will not perform as expected! Note to self from my twitter feed: “Follow the process and not the result, follow the things that you have control over, the #market will do whatever it wants”.
Conclusion: Same as it has been for a few weeks now, follow a proven process and enjoy the bull trend, while managing risk.
Last week I did an interview on the Desire to Trade podcast. You can catch up with the podcast at the links below, and I would appreciate it if you can share the links. TY.
Direct listen links: Episode 82
Show notes page: http://www.desiretotrade.com/miguel-tiexiera/
iTunes Link: http://desiretotrade.com/itunes/
Stitcher Link: http://desiretotrade.com/stitcherpodcast/
If you would like to know more about my trading methods, contact me on any of the links below.
Miguel — TravelingTrendTrader
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LinkedIn: Miguel Teixeira