Wisdom

• The reason for using a trendline or moving average is to get an objective assessment of the price direction.

• Disciplined trading is most important because it clearly tells you when to get out of your trade and take your profit or loss.

• You can’t follow the trend and take profits at the same time. Profit-taking works with short-term trading, but profit-taking fights with the long-term trend. You can’t hold onto a trend trade to get a big profit and at the same time take a small profit when things go your way for a few days. You’ll need the big profits to offset lots of small losses.

• Trend analysis says (à la Yogi Berra) the market is going up when it is going up. There’s no hocus pocus. Fundamentals, or value investing, may say that the company is in great shape while prices are falling. You’ll do much better trading technically.

SPX 5/28/2010

The market closed the week positive up 0.16% as is really trying to repair the damage created by the strong sell off.
As you can see on the daily chart this week the market posted higher lows, but still was unable to break above the 200 day moving average.
Still a very volatile market to trade as there is no real direction to follow as all the movements are driven by news.
We have support at 1085 and resistance around 1105 at the 200 day moving average, and until that level of resistance is not broken and the index closes above it, the bears still have an edge on this market.

Wisdom

The trend is your friend, but which one? Opposing trends can be found on various time frames in the same security, at the same time creating confusion and worse, unnecessary losses.

Understanding market structure and trend alignment allows you to put emotions aside and focus on the right trade at the right time. Brian Shannon

SPX 5/27/2010

Volatility at it's max, the market closed down yesterday and continued selling into the aftermarket session reaching 1055, but this morning it had turned around and was gapping up +20 points into the opening bell and the buying continued all day long into the closing reaching 1103 right at the 200 day moving average resistance level, a gain of 3.25%
The ADVN/DECN index remained at the same level all day around 13 to 1
The good news is that closing above the 1100 level should attract some buyers, but with the volatility we've had lately, there are a lot of bag holders that were short trying to get out at this level and that could cause the index to turn around.
Monday is Memorial day, so expect low volume tomorrow as most traders will be leaving early for the Holiday.