There is much talk in this business about the markets crashing. Do we take out money now or do we let it ride? What is interesting to me is the way the FAANG stocks alter the overall market. Facebook, Apple , Amazon, Netflix and Google have been controlling the direction of the market and lifting all other sinking boats with its enormous lunar pull on the market tide.
Even with Thursday and Friday's pullback, we are still above the white trendline that we call the DMA. In fact the S&P 500 and the Nasdaq have been trending above this line for the most part sans a couple of days since April.
We are technical traders. We believe that the news, political trends, future outlooks, earnings...etc are all built into the chart. The chart is what lets us know when to get in and out because it reflects the sentiment of the market participants buying and selling positions.
It is a bit easier trading Indexes like the DOW, the S&P and the Nasdaq because there is less volatility. The only thing that really jars these indexes are the Federal Reserve and White House policy changes.
So to answer the question of where do we go from here, the answer is for now stay put and stay long until the DMA trend is broken. It is getting awfully close to being broken, but we stay in the long trade until it closes below that line drawn in the market sand.
With that said, if you wanted to micro-manage your account, you can move to a smaller time frame. As you can see in the chart below, I created a more granular 4 hour chart. In this chart, the price action has fallen below the DMA. So, in the short term, you would be out of this trade and wait to see if it recovers.
If this trend continues, it will break the daily chart and the longer trend traders should exit the trade. So, for now, those using the 4 hours chart (which we recommend) should be out of the trade while those using the daily chart should remain in, until further notice.
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