The Trend Is Your Friend

Good Morning,


I am guessing we will see a shift at some point in the fundamentals and/or technicals that will tell us this bull run is over. By my count, in 2 months, we went from 1200 in SPX to 1352. The math comes out to 13%. As of the first of the year, the SPX is up 7.4 percent.

If you are an intra-day trader, you know that the ranges are tightening up as equities rally and volatility declines. You also know that there is a lot of buying pressure and the fact that sellers are non-existent and that more money "is on the sidelines" and could come in, equities STILL have huge upside potential.

You know me, I am conservative and even though the trend is motoring to the upside, I still approach it cautiously and trade strategies that I think are appropriate for the "frothy" markets. I am not saying I am necessarily standing in the way of them, I am just saying that I am happy to catch SOME part of the move. As the title suggest, the trend is up and strategies that work in a bullish market are fair game...until something tells us the bull market run is over.

Let's face it, someone will get in as the markets get to their "highs" and then reverse. That someone will have to take a loser as things start to roll over. That person has seen their portfolio increase substantially over the past few years if it is tracking the broad index. You can not forget how well the markets performed and at some point that will change and at some point we may have a loser buying the equity market. We have to be OK taking a loser, that is part of trading, right? As long as we use technical analysis, the proper risk to reward and the proper strategies, we won't have a loser that is abnormal to our trading account, risk tolerance, prior gains, etc...

Moving over to forex, the trends are in place with the USD getting weaker and weaker and weaker. The same thing will happen. Someone inevitably will have a loser selling the USD. If you keep it on context with your recent trades and performance, a loser going with the trend and using fundamentals and technicals is OK!

Just a sidebar, the Bloomberg commentator just said: "Equities are having a rough day". Is she serious? Equities are having a rough day? The SPX was at 665 less than 3 years ago, we are now at 1352 - more than 100% in gains. And she is saying that we are having a rough day? So you can see where I am going with this. As I said, I am not standing in the way until fundamentals and technicals tell me to do so. But, I am approaching this bull market with conservative bull market strategies (and bear market strategies for the USD).

Link to Monday's Webinar on Moving Average Crossovers

Happy Trading and Be Environmentally Cool

Coach Brian
Forex is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.