Trade The Trend Traders Ambushed
Institutional traders have attacked trade the trend traders like us
. In bitter, vile, fashion, Institutional investors are dumping into the up swings and covering shorts into the down swings to compress the swing range too narrow for the majority of us to make money in. This has created head fakes both to the upside and to the downside over the last week.What has scared bears like myself is that a certified higher low is now in place with verification on today's chart.
As I wrote about last week, the life cycle of the previous downtrend channel has come to an end. We are now in no-man's territory while a different channel is being formed. We do not have adequate data yet to figure out if we are moving into a sideways trading channel, or an uptrend channel.
While there is no obvious trend, then what must trade the trend stock traders do? Go to the sidelines and the safety of cash.
Now we have been in cash two times over the previous couple of weeks and while we bet a new trend had been recognized making us jump back in, it turns out we were head faked and murdered. I don't know about you but I'm tired of getting my butt kicked by the better prepared and armed Institutional traders.
One day we may possibly have a Stock Traders Bill Of Rights where the battleground is made just, but for the present, inequalities continue to exist among professional and amateur traders such as Institutional traders have access to all limit orders, they go to lunch with market makers and can make non-open market trades, they have access to a faster stock data feed and can use high frequency trading schemes against us, and they use the media groups to influence public opinion about a business or the economy as a whole.
Something that is additionally important is that on the daily chart of SPY, bulls have re-taken the 50 day MA although we still need confirmation of the break.
The error I made was jumping back in this market twice now and being wrong both times. This means that I must raise the bar for what I consider to be a new trend forming. This suggests that I should find more bullish or bearish indicators on the stock charts than I have in the past. Even a Bearish Head and Shoulders Top and a Burial Cross was not sufficient to place my money on the short side. Not even a Bullish Downtrend Channel break was enough to put my money on the long side. Every one of these technical indicators have meant nothing over the last several weeks. The only thing that these technical indicators have accomplished is to draw us trade the trend traders from off the sidelines and into a trap where we have been killed by the thousands.
trade the trend
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