After our updates on the 11th, 17th and 19th of May we can now confirm that our analysis was exactly as we predicted and we have now got our retest of the lows. So rule one has been fulfilled and we are now we are waiting for support to form and institutional buyers to enter the market.
[caption id="attachment_568" align="aligncenter" width="300"] SP-500 Chart[/caption]
Because rule 1 has been met, we are now looking at going long. However, if the market continues down, our other rules, which are put in to safe guard us and our wealth, will not be met. Before all these rules are met we are still waiting on the sidelines until we get maximum risk to reward.
We have been out of the market since early April so we can be objective about the selloff. Often when traders are in the market during a selloff they look for every possible sign that they are right and hope they will stop losing money.
Here at Stock Market Strategy we are not in the business of hoping. We make qualified decisions based on the direction of the market when it has proven that the signs are valid. So far we are seeing some signs that this support might hold. The first sign is that we saw massive volume yesterday and this could be the capitulation of the weak longs which we mentioned in our update
After our update on May 11th we still need to shake off the rest of the weak longs. When that happens we can climb again and enter some long positions.
Another sign is that this is unlikely to be the beginning of a new downtrend (this is not to say it won't happen in the future) is that this is the first time we have seen a break of longer term Moving Average (MA). Normally before a bear market or new downtrend we will see multiple breaks of MA prior to the "real" break.
At first sign of support we will be ready to dip our toe into the water by initiating a few long plays but we will not enter with full position until further evidence.
As always, cash is king at times like this.
Don't worry if this chart analysis is a bit new to you. Sign up for our premium service and we will walk you through the trades with entry price, stop and target
After our updates on the 11th, 17th and 19th of May we can now confirm that our analysis was exactly as we predicted and we have now got our retest of the lows. So rule one has been fulfilled and we are now we are waiting for support to form and institutional buyers to enter the market.
Because rule 1 has been met, we are now looking at going long. However, if the market continues down, our other rules, which are put in to safe guard us and our wealth, will not be met. Before all these rules are met we are still waiting on the sidelines until we get maximum risk to reward.
We have been out of the market since early April so we can be objective about the selloff. Often when traders are in the market during a selloff they look for every possible sign that they are right and hope they will stop losing money.
Here at Stock Market Strategy we are not in the business of hoping. We make qualified decisions based on the direction of the market when it has proven that the signs are valid. So far we are seeing some signs that this support might hold. The first sign is that we saw massive volume yesterday and this could be the capitulation of the weak longs which we mentioned in our update
After our update on May 11th we still need to shake off the rest of the weaklongs. When that happens we can climb again and enter some long positions.
Another sign is that this is unlikely to be the beginning of a new downtrend (this is not to say it won't happen in the future) is that this is the first time we have seen a break of longer term Moving Average (MA). Normally before a bear market or new downtrend we will see multiple breaks of MA prior to the "real" break.
At first sign of support we will be ready to dip our toe into the water by initiating a few long plays but we will not enter with full position until further evidence.
As always, cash is king at times like this.
Don't worry if this chart analysis is a bit new to you. Sign up for our premium service and we will walk you through the trades with entry price, stop and target