Where's the Market Going Next?

[Shawty_]

Seriously!

Watching the market decline 7% and then jump up just about the same amount in 2 weeks wasn't the most comfortable feeling, given the political and economic situation in our country (mostly political, though). That's what the market does, though, isn't it? It goes up, it goes down. But the issue isn't that; it's that it went up when everything pointed to down. Then it stayed up, when everything pointed to down. The market is behaving very strangely. But hey, this wouldn't be the first time the market has been irritational. It does make prediction a difficult task. And that's our job, as good traders and investors, we are tasked with only two things: to correctly predict the market's next move even if that move is in a range, and secondly, manage the risk that goes along with it. But that's SO hard when the market is irrational.

What's your take on the recent movements. What do you think caused them? Are they normal? When do you think things will "stabilize" and in which direction? What time frame are you using for your prediction? What price?

 

[tomorton]

Price has recently been rising in a sharp uptrend. Though this has been short and very steep so far, I have gone in long and expect price to either dither sideways a little then rise, or to rise abruptly from here (I give it 50-50 as to which is more likely). The point for me is its an uptrend and I can't do anything but follow it or ignore it.

 

[malaguti]

when you say everything pointed to down..precisely what was pointing down?
you have 2 indicators they both pointed up, price is pointing up on every timeframe

... But the issue isn't that; it's that it went up when everything pointed to down.

looking over a couple of your previous posts, it has been mentioned "trade what you see",
Its not what you feel, not what you think and certainly not what someone else says..including myself! its what you see in front of you. what is price doing? going up, or going down..trade that, look for where to get in and trade that direction
so rather than attempting to predict, attempt to guage direction

 

[Shawty_]

Price has recently been rising in a sharp uptrend. Though this has been short and very steep so far, I have gone in long and expect price to either dither sideways a little then rise, or to rise abruptly from here (I give it 50-50 as to which is more likely). The point for me is its an uptrend and I can't do anything but follow it or ignore it.

Thanks for your reply, Tom. At what point do you call it when you believe the price will continue rising? Looking at the chart, perhaps some people were preparing for more of a breakout when the price touched on the previous high. At you can tell, a consolidation ensued instead of a breakout. My question is, how do you differentiate between an upcoming consolidation and a breakout?

 

[Shawty_]

when you say everything pointed to down..precisely what was pointing down?
you have 2 indicators they both pointed up, price is pointing up on every timeframe

looking over a couple of your previous posts, it has been mentioned "trade what you see",
Its not what you feel, not what you think and certainly not what someone else says..including myself! its what you see in front of you. what is price doing? going up, or going down..trade that, look for where to get in and trade that direction
so rather than attempting to predict, attempt to guage direction

Hi Mal,

Thanks for your reply. There are two things I'd like to clarify before I dive in: (1). The indicators were not placed in the screenshot to help the analysis. I hadn't had time to remove them, and as we can all attest, indicators are confirmations of movement and not predicators, usually. For (2). although I appreciate you taking a historical approach, I would recommend focusing on this post itself. This post is not related to any other aside from the trading and market link. My takeaway from your post is to keep an eye on the current movement, i.e. the trend. I think that's a great piece of advice. My goal with this post was to get an idea of what other people are thinking in terms of their approach and strategy to the market. Everyone needs a mentor.

 

[malaguti]

that's fair enough, so yes you are absolutely correct. my approach is all about trend. identification, confirmation and then trading in that direction either at the breakout of (based on certain criteria), or as a continuation of.
in addition, so as to smooth out an equity curve, i'd advise multiple uncorrelated strategies. hope that helps

 

[Shawty_]

that's fair enough, so yes you are absolutely correct. my approach is all about trend. identification, confirmation and then trading in that direction either at the breakout of (based on certain criteria), or as a continuation of.
in addition, so as to smooth out an equity curve, i'd advise multiple uncorrelated strategies. hope that helps

Hello Mal,

I didn't mean to ignore one of your questions, my apologies. When I say the indicators are pointing to down movement, and I did a really bad job of explaining this in my first post, I was referring to the economic condition in the US. There are some classic indicators of an upcoming recession: an inverted yield curve, declining monthly consumer spending and employment numbers, and the country's deficit has grown by ~40% since 2016. In my very short tenure in the financial markets, seeing these figures makes me very nervous of an impending economic collapse.

To your second point on multiple uncorrelated strategies, can you give an example?

 

[malaguti]

i've got you, to compensate for things changing, the overall index is always a filter for me. economic conditions can last for ages, markets can continue regardless.
and when i say uncorrelated strategies, one could be trend following (sometimes low hit rate, often high drawdown) now if you mixed that with say a sector rotational strategy and a mean reversion strategy, and mixed timeframes as long as each strategy was relatively high in terms of profitability, the combination of these strategies works wonders on your equity curve.
so get one under your belt, but don't stop there. you're not looking for one strategy but a portfolio of
does that make sense?

 

[tomorton]

Thanks for your reply, Tom. At what point do you call it when you believe the price will continue rising? Looking at the chart, perhaps some people were preparing for more of a breakout when the price touched on the previous high. At you can tell, a consolidation ensued instead of a breakout. My question is, how do you differentiate between an upcoming consolidation and a breakout?

I don't try to distinguish, I just get in with the trend. I ignore resistance in uptrends and support in downtrends and just get in there regardless. I always believe price that's already in an uptrend is more likely to rise next than do anything else next - that's the nature of trends.

 

[4xis2ez]

Cycle analysis. Market not random.

 

[4xis2ez]

Notice time stamp of my post. Yes, it was edited on May 5 to delete info on how it's done.

Stock Market Sell-Off coming in May

Here is my cycle analysis of the Dow

www.trade2win.com

 

[Shawty_]

India announced retaliatory tariffs on US exports following expulsion from a trade preference program. The tariffs went into effect today. Over the past week I've watched the SPY hold 289, but I'm concerned the India tariffs will drive this down at least temporarily. What I don't know is...how long and to what extent? Should we expect just as quick of a bounce back? I would say yes, the market isn't happy being down lately.

 

[fibo_trader]

India announced retaliatory tariffs on US exports following expulsion from a trade preference program. The tariffs went into effect today. Over the past week I've watched the SPY hold 289, but I'm concerned the India tariffs will drive this down at least temporarily. What I don't know is...how long and to what extent? Should we expect just as quick of a bounce back? I would say yes, the market isn't happy being down lately.

You're killin me, Cherie

Talk to me, Cherie. In just one sentence I can straighten you out by 5000%.