Hello Readers, and welcome to another edition of Technically Speaking!
We’ve been experiencing a raging bull market this year, but one that has remained rather subtle (some would say). I say this because the public is used to experiencing the bull market (and recognizing it) when the economic indicators are obviously bullish as well. But we have had a mixed bag of economic indicators that seems to be confusing market participants about future moves in the market. While that may work as an approach, these lagging indicators are too often distracting, stealing the focus from the price action. The most significant advantage of following the practice of technical analysis is that risk management is given top priority. With that as a prerequisite, it is much easier to take market positions based on price movements, ignoring all the noise surrounding it. Ignoring the noise makes sure of early identification of trends.
What are some of the easiest ways to ensure you don’t miss the early trends?- Maintaining scans. When I began my journey in the market, I tracked multiple timeframes for multiple clients. To be on top of things, I had scans ranging from 3-day highs/lows to 52-week highs/lows, multiple timeframes moving averages, and crossovers. I would then create a score based on the number of scans in green or red and paint a relatively clear picture of where the market stands. While that can get quite overwhelming quite fast (been there), it would be easier to focus on a specific time frame and track the scans to identify how they change during a market cycle. This is as basic as it gets when it comes to a system. But I have found it to be helpful to me over the years.
Even if you track indices globally, numerous countries are making new 52-week highs or on the verge of big base breakouts. And that is a wonderful place to start as well! With the Dollar Index correcting lower in the downward sloping pattern and making lower highs and lower lows, equities will feel the tailwind of that correction that could propel the market higher. All this, with the doomsday chatter going on in the background. Nobody knows what tomorrow brings. But as a market participant, you need to know your risk appetite and strategy. Fortune teller was never part of the job description! So if you are wading through this market trying to find your way, you can start with the simple exercises mentioned above to find your footing and build from there!
Until we meet again, Think Technically!