2 May 2014

Weekly closed with a positive candle stick for the SPX and DOW.  Therefore, there is no conclusive trend forming as of the moment since last weeks bars were red.  The whipsaws are frustrating nonetheless.  Even as good a trader couldn't follow these whipsaws with consistency.  hopefully the 2 months worth of sideways movement will wane sooner than later.

The weekly supports and potential targets are ever changing.  This week those supports are:

1840.49 (20 WMA)
1785.54 Lower BB
1677.31 (75 WMA)
1432.47 (200 WMA)

These targets might be far off but its good to know where a major support lies in case of a abrupt move.  Often times also if a MA or Band is nearing a cluster of price support will we also see time and price meet.

For example,  the low of May-June of 2012 made a low in the range of 1275.  Not only was both 75WMA and Lower BB line within the range, but the price supports in 2011 specifically March and June of 2011 is also showing that a support in this range is highly likely.  Further studies can be made for the different MA like the 50, 90 or 100 WMA.  Since the 75 WMA is closing in on the 1700 area.  We should try to at least be open minded and look for major support here in a not so distant future.

On the current situation, we can see that another reversal candle formed on the daily chart (a bearish red candle).  This coupled with a diverging MACD should keep us on our toes or at least be aware of these potential signals.  The ST is still in overbought and risk of acceleration is to the upside.  We should keep any short trades back until we see a good confirmation that we are down-trending.  The ST would be a good indication of this.  Especially when it is out of overbought and in a down-trend.

MT: UP
ST: UP
PA: UP

The one thing I stress is that many of us have the urge to want to initiate or pull a trigger on a trade that we think might happen before our indicators cross or turn.  Discipline is the name of the game and although we won't get the top or the bottom, often times we can have high risk profit waiting for confirmation.

I don't write this to tell people or traders what they already know.  I write this to also remind myself of this rule from time to time.  Because I am my worst enemy...