We are range bound. Dow Jones Industrial Index is presently stuck between a 7800 area support and 8200 area resistance. Momentum is still pointing to the upside and we may get a push through the 8200 resistance. This is an area where I would be open to establish new long positions, but not too agressively. That means trade small so that you can use wider stops. This type of position would be good to hold for 2-5 days.
Most people always want to know “Why” the market will go up. Well this week we have many possible catalysts that the media propaganda machine can sink its teeth into. On Tuesday we have the S&P/CaseSchiller home price index and consumer confidence. Wednesday is first quarter GDP and Fed rate decision and crude inventory. Thursday is initial jobless claims and PMI. There are other reports coming out of the Eurozone but not worth mentioning. It is good to be aware of the upcoming news reports, but that is about it. We usually stay out of the market during these reports, and let everyone else figure out what to do. Once the market chooses a direction, we are then ready to participate.
At Cashmechanics.com we are trend followers and apply this approach to a variety of trading strategies. Trends can occur on 1 minute charts all the way up to yearly charts. If you are a daytrader, you want to know how to relate the price action on different time frames in order to position yourself properly. Before you can take any trades though, you have to have other variables defined as well. We use this philiosophy in our trading and you can see it in action on a daily basis in our chat room. Join us and learn how, especially because it’s free. Talk to you in the chat room.