S&P500 20th July 2015

  • Currently the market its in what I like to call a semi-lateral. in my opinion this is when the market keeps going up but very slightly in a channel. You can see what I mean by looking at the graph bellow. The market is still going up but it goes up slowly and bouncing up and down the channel.S&P500 20072015 Index

    So in my opinion theres two considerations that we should have in mind when this is the situation:

  • Short term: This should be traded like a lateral market. Using support and resistance + oscillators to try to buy at the support and sell at the resistances.
  • Mid term: Eventually the market will break this pattern. Up or down we can not know. So what we have to do is try to make some money by trading the lateral and then see in what direction breaks to then start trading a bullish or bearish market.Let’s give an example of how to try to trade this as if it was a lateral market. As you can see two weeks ago the market went down and made a bottom at the level of the 200SMA a very importante support. And a couple of days afterwards we had buy signals in both stochastic and koncorde oscillators. And then it went up allowing us to make some good profit and stand in a saf position already.

    A position that we should close once we see the price getting near the top red resistance. Or if we see oscillators turning around to give now a sell signal.

    So in conclusion: Try to trade this market as a lateral market until there is a break-through in some direction. And when that happens you will know that the market position will be the one of the break-through.

    See you soon!

    Nuño Pérez del Barrio
    Twitter: @nuopb