Trading range

Another slaughter on the Wall Street today with SPX losing no less than 18 points. Bears are pushing the index very close to the lower edge of the trading range, 1067-1070. Those who want to speculate can buy here hoping that the index will move back and forth between the lower and the higher edge of the trading range. This is not my favorite kind of trading so I am ready to step out of the market soon. I don't need to be in the market all the time. Alternatively I can switch to shorter time frames and ready to go in and out very fast but this is time consuming and nerve racking, not to mention the transaction costs I am going to pay.

EMA50 did cross EMA100 on 30 minutes chart and is very close to do it on 60 minutes charts as well! Price is now bellow a slightly declining five days moving average. It's unbelievable how fast the momentum has changed in only four trading days. If one insists to be in this market I would suggest very few shares and some hedging since volatility is extremely high and market can move very fast in either direction. Even RSI, a pretty conservative indicator I am using as a confirmation of a certain trend direction gave mixed signals these days, it went above 50 (buy signal) on Monday just to slip bellow 50 once again. MACD is about to give a sell signal as well after giving a buy signal around 1065-1070 so people using this indicator are also not making any money right now.


The only people that are making money are those using Williams %R, that gives you overbought (above -20) or oversold (bellow -80) levels. As you can see it stands now at -64 so is still not at the oversold level. This indicator should not be used in a powerful uptrend or downtrend since it can stay at oversold or overbought levels for a long time. Look at the February-April rally and see that Williams indicated overbought level since the day one of the rally!

Once again, let's keep an eye on 1067-1070 level to see if it holds.

babaro

P.S. Be carefully, the cat bellow can terrorize your mouse!