It’s about that time again; when everyone who has a blog (or a Twitter) tells you that the market is about the correct, finally. The thing is, they can say this all they would like, but in the end: No one knows, not even those people on the television screen. So, before we go any further, if we have not already made it obvious: I do not know where the market is going to go, so if this is what you came here for, it’s time to click the ‘X’ button in the corner of your screen.
Instead, we’re going to discuss what we currently know:
1. The market is below it’s 21 moving average
2. The market has failed to rally/bounce when given the chance
3. As of Friday, the market has hit the same level of support (198.50) on $SPY for the fith time
4. The market has been consolidating in a sideways manner for the past 2-3 months (longer for the IWM)
5. The number of quality long set-ups is low, so low that I currently have zero positions on (but again, this is just MY process)
6. The market is technically NOT oversold, as per Bollinger Band analysis
There are many more facts that could be said, but part of being a trader is being able to sift through the noise and derive the meaning of moves through careful analysis of the facts we have. Therefore, the above six things are the most important six things I find to be pertinent in the market at this point.
To me, the above six listed facts do not describe a ‘healthy’ market, and regardless of whether or not the market is going to go up or down next, it is not in a healthy state.
The point is: I don’t know what’s going to happen, nor do I need to. I need to know if the market we currently have is healthy for swing trading and the answer to that (right now) is a resounding, NO. Perhaps this changes tomorrow, next week or even next month, but until it does, I will do nothing.