Why Rearrange the Deck Chairs, Just Get Some Sun

So many traders are doing nothing now. Watching, doing an occasional day trade, finding a single solid setup, yes, but very little activity on swing or position trades. Most trades are closed out very quickly. Profitable positions that have been held for a while are opportunities to take risk off the table. Many interpret this as being fearful of the next move. That is wrong. It is not about fear, it is about having an edge. This chart illustrates why. It shows the performance of the 4 major equity index ETF’s, the SPDR Dow Jones Industrial Average (ticker: $DIA), SPDR S&P 500 (ticker: $SPY), iShares Russell 2000 Index (ticker: $IWM) and Powershares QQQ, (ticker: $QQQ) since March 16th.

There are several things to take away from this chart. First the length of the moves both up and down are decreasing. Second, the range of the moves is also decreasing. Third and most obvious from the last few candles but also prominent from the performance chart below, there has been rotation between the Indexes. Money sloshing around in shorter and shorter timeframes between large cap and small cap, and between sectors but with no clear leader. The last three weeks have been at most a 4 point range on any of these ETFs. The next move may very well be down, or it might be up. With a tightening range, shorter moves and no clear leader you need to either sit back and watch or be in and out quickly. You have seen many say it. Hope this helps explain why.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

blog comments powered by Disqus
Dragonfly Caps Blog