| All eyes on the Dow |
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It seems that everyone you speak to at the moment is going on about a double dip in the economy and it is beginning to wind me up a bit to be quite honest. It seems that up until now the economy was doing quite well again, I mean after all we have seen a massive move from the bulls since the lows of 2009 up until May this year haven't we? OK, so since May this year we have been experiencing a sideways move in the markets and people generally seem to be a bit nervous, hence the sideways move. No one knows which way the market is going to go and there is a lot of indecision.
The thing that bugs me is that the dreaded media seem to influence us so much that what ever they say we seem to take for granted but if we were to start looking at things on our own in a cold and logical manor we may well just see thing sin a different light.
So the facts are, yes we did have a massive bear market from 2007 to the beginning of 2009 and let's face it if you didn't know how to sell short, you may have had a torrid time. The same would go for people who did not have their stop losses in place and have seen all their profits dwindle away at the speed of light. But lets take a look at what we are seeing in the markets at the moment and decide for our selves what we are going to do.
If you take a look at what the Dow Jones 30 is doing right now, you will see that it has been moving in a sideways channel since the beginning of the year. There were lots of talk about it forming a dreaded head and shoulders and that we should all be aware. I even posted an article about it to make people aware of what "might" happen if the head and shoulders formed properly. But as you can see, the head and shoulders did not form and we now have a sideways channel with another peak just been formed.
The interesting thing about this last move up is that it has now moved slightly above a resistance line I had drawn a few months back which to me is a positive sign. Why? because like me, many other traders will probably have plotted a very similar line as well and once a line like this has been broken it can sometimes be a sign that the masses are beginning to change their view about what the market will do. After all, the markets are just a reading of the general mass psychology of traders isn't it?
For those of you who have been to one of my trading boot-camps you will know that I love to use the MACD histogram and what I noticed about the last downward movement was that the bears showed a weaker reading on the charts which may well again be a positive sign.
So my point is that you can take notice of what everyone in the media is saying or you can study what you are seeing yourself on the charts and make up your own mind what is happening. Personally, what I am seeing is that there is plenty of indecision but it is certainly not the dooms day people are talking about. Maybe if we did our own technical analysis properly and made our own decisions we will do a lot better than the press are making out. It is always necesarry to use your risk management rules when trading so that if you are wrong you don't get hurt by the markets.
As always, I welcome any feedback and comments so please email me with your thoughts on This e-mail address is being protected from spambots. You need JavaScript enabled to view it or check out the rest of the web site and hopefully you will want to down load my free e-book on trading.
So until next time...
Happy trading
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