As a trader, I have learned that having strong views about market direction is pointless.
It can lead to confirmation bias and losses as a result of ignoring warning signs.
Discussing the state of markets on a weekly basis and showing you the chart set ups shouldn’t be seen as a claim that I know what the markets are about to do every minute of every day.
I am just showcasing my method for analysing price action and every now and again when I see the odds of something happening as quite high, I will point it out.
Over the past few months I have been bearish on the S&P 500 and had a target which was the midpoint or ‘point of control’ of the correction.
That target was hit last month.
At the time, I said that the odds of a rise or fall are around 50% once the point of control is hit, so that’s where you should take some or all of your profits.
I certainly didn’t know that markets were about to blast off and rally in the way that they did.
I will happily flip my view to bullish if the charts tell me to. But as I show you in today’s Closing Bell, there is still a risk the S&P 500 can turn back down from this area. The weekly trend remains down so until that changes, I will tread carefully.
But with bonds rallying and potentially confirming a monthly buy signal this month, equities may be close to a sustained run.
In today’s Closing Bell video I have a look at the US 10-year bond yield, oil, gold and the S&P 500.
Editor, Fat Tail Daily