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Archive for July, 2010

From Failed Moves Come Fast Moves

Market participants have been observing what is supposedly called a head-and-shoulders pattern in the S&P 500. Once its lows were violated, they anticipated further downside but this scenario failed to materialize as our benchmark made a u-turn at 1010 points. Dynamic System correctly signaled a long entry.

Since then we could recover quite a bit and rescue ourselves back into the safe zone of 1050 and above. Currently we can consider this a fake breakdown, to levels which the market is unlikely to return to again.

The rally on July 20 was a very encouraging day for bullish investors because on that day we marked a higher low in this new uptrend. Therefore, setting a stop loss order there is the maximum allowance we should give this market.

We are now looking to break the 200 moving average that has been quite a problem area recently, and would welcome a decisive breakthrough of the 1100 mark in the coming few days.

July 22, 2010 | View Comments | View Post

The Rally That No One Joined

It is hart to follow how some individuals believe this whole rally was just so-called short covering activity. What difference does it make whether price goes up through short covering or through new long-term commitments? Can we know it at all? Technically, the reason comes down to the same bottom line. Prices go up because there are more buy orders than sell orders.

There is always a major trend that dictates the wiggles intraday. This has to be the focus to be a successful trend follower because only then the activity being observed day by day can make sense. Just because someone says it is “merely short-covering”, does it mean a trader should better not reap the profits of a rally? It could go down anytime, we are told.

The average investor is missing out yet another huge opportunity because he is being fooled into believing that the next crash is just around the corner. So after the dot-com bubble, where he refused to cut losses and after the financial crises, in which he was forced to give up his holdings, he is now in denial and – as always – doing precisely the opposite of what he should be doing.

Fortunately, at Trend Architect we have the vision to make trend following available to everyone. We put great effort in making this as easy and affordable as possible. With just $39 per quarter you can join the big trends of the financial market.

July 11, 2010 | View Comments | View Post
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