Since the rise from ± beginning November there hasn’t been a pullback of any significance so we would expect at some stage that there must be a breather which happened last week. So far price is finding support at the previous resistance level around 2190–2200. Below that there is the 50 day MA which I would like to see hold if this is to be strong bull market.
Of some concern to the prospects of this bull market is that the Nasdaq is still trading in the range that it has been in for most of this year. I would prefer to see both the S&P500 and the Nasdaq breakout to new highs.
Where does this leave me on my 3 trading methods:
Trend Following — I am in buy mode and keeping a watch list of the stocks that I think offer the best opportunities. None of the stocks on my watch list have had the correct setup so far. I will continue to monitor these and take the trades should they meet my criteria for a setup. I will add to existing positions if these setup and may find that the stocks I am already holding may be the best opportunities going forward.
Mean Reversion — Last weeks pullback gave me excellent trading opportunities which led to an excellent week for my mean reversion model. From here further pullbacks will offer new opportunities…as long as the support levels hold…if this turns into a deeper correction I will give some profits back.
Swing — I went long the Nasdaq using TQQQ and this is the only trade I have at the moment. I remain a dip buyer and will enter other index ETF’s if there is a deeper correction.
P.S. The three models are traded separately and have different setup requirements and time horizons. I may be neutral on my trend model and looking to go long on the swing model for example. Currently a deeper correction may not suit my mean reversion trades but will probably offer entries on my swing trades and my trend trades will tick over.
Comments or questions can be sent to any of the links below.
Miguel — TravelingTrendTrader
LinkedIn: Miguel Teixeira