Looking at the chart below (click to enlarge), I drew some simple lines connecting recent highs to lows and lows to highs to show how much it resembles an EKG. If you're a swing trader like myself it makes it really difficult to enter positions and hold them longer than a few days because the trend reverses so quickly. For this reason I’ve mostly been trading gold/silver as the trend there seems to be a little bit longer, not changing every 4th day.
But the last time I got a bullish sign on the Dow I entered some longs and did fairly well, so near the close Wednesday I decided to enter a few long positions despite what common sense is telling me. What I mean by that is that it doesn’t feel quite right to buy this light volume holiday rally, but I’ve read that the difficult trade to make is more often the profitable trade. In fact, most traders I follow on Twitter or blogs I read seem convinced this market is going to roll over and play dead starting in January.
I wouldn’t be surprised to see heavy selling starting as early as today, but that’s one reason why I think we may move slightly higher than most expect. I’m not calling for a new bull or anything, just a continuation of this current bear market rally and I’m positioning my portfolio accordingly.
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ReplyDeleteUS Gold Bureau