SPY Chart 5/4 Trade what you see

It is on these days that as traders we often start to adapt the idea that the sky is beginning to fall.  Mastering our emotions when the markets are rough is difficult, but the fact is there are going to be bad days and that is difficult to control.  As traders we have to be disciplined to recognize we have to trade what we see.

Hopefully the positions you have initiated this week you have some strong rules that you are following and I would advise that you do.  I know that I entered some long positions this week that I am still confident will work out,  but in case they don't the thing that brings me peace of mind is the fact that I entered with the risk rules  I place around every trade I made.

So how does that help us know what to trade right now.   I want to give an overall market picture look as to what each major index technical chart is showing. I am going to go over  SPY (S&P 500)  Dow Jones, Russell 2000 and the Wilshire 5000, and I also want to include TLT (treasuries) and VIX as they usually will signal fear and flight to safety.

Let me start of the with the Russell 2000  and Wilshire 5000  these are very large market indexes each shows more a more bearish pattern set up.  Each has more of a descending triangle pattern, but neither has broken the low of the last month that indicates that there is still bulls in cards for the market as a whole even though we have had continuing disappointing news our lows are not being taken out.  This bodes well for the market if by next week the lows are taken out it would be wise to begin to look at things through more of a bearish lens.

Russell 2000 and Wilshire 5000

The SPY and Dow are a little more Neutral and Positive. Looking at the Dow it is by fart he most bullish even though today was a tough down day it still did not take out the previous low.  It does have a bit of a fight to get by resistance 13,264.  The SPY Chart is more neutral we have re-entered the channel we created starting back at the beginning of April.  The big thing I have noticed with all the indexes is that we have not broken below short term support.

 

The Fear Index  (VIX) and the Flight to Safety Index (TLT) are still trading below resistance.  This important.  With them continuing to trade below their resistance bands any move downward on other major index (SPY, DIA, RUT, WLSH) becomes more difficult.  One interesting thing I noticed about treasuries is that they are continuing to trade at very low yields and it may be difficult for them to push any higher




If you are looking to start new positions next week it would be a good idea to see what Monday brings as it should give us a good idea of where the market will go for next week and into the next couple of weeks.

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Disclaimer: This article is intended to be informative and should not be construed as personalized advice as it does not take into account your specific situation or objectives.