2014 has made both the bulls and bears look both smart and dumb. With each “short covering” rally, we have seen the bulls calling for the SPX (S&P 500 index) to head to 2000 and beyond, only to see it get pushed back down at the previous highs.
Then when the SPX drops 75 points, we see the bears come out and start calling for the next crash. So far, we have not seen either prediction play out and neither side has made any money.
There are plenty of reasons to expect higher levels and just as many to expect lower levels. But being stubborn and holding out for the big move has been the only losing trade this year. This range will break eventually and when it does, a new trend will be in place.
The problem with trying to predict when this trend up or down will begin, will have you missing out on a lot of money, trading both the long and/or short side. In a range bound market like we are in now, be open minded to both the long and short trades. Forget about the big move until the actual trend starts.
But most important, watch the technicals and when your trade is approaching support/resistance, take some of your position off and set stops for the remainder of the trade. Then just let things play out and get ready for your next trade.
The trend will start at some point and when it does, and then you can take a position to hold for a longer period. But, in a trading range like we are in now—switch to a 60 minute chart and take the quick profits.
