Last week, I commented on the way that markets often turn at round dollar figures or other points that are psychologically significant to the market participants.
Recently the markets have hit a couple of significant major price levels, 10,000 on the Dow, and 1,100 on the S&P 500 index. Just like individual markets often turn at even $5, or $10 price levels, the overall stock market often pauses or turns at these price levels because they have significance to many traders and investors.
So one should expect some resistance as the price approaches a price level like 10,000 in the Dow which the market has not seen for many months, the same for 1,100 for the S&P 500.
The resistance may only last for a few days, but you will generally get some resistance.
Trading From Your Gut
Way of the Turtle
Inside the Mind of the Turtles
{ 2 comments… read them below or add one }
Yes interesting indeed. If you look at the Dow-30 chart for the last couple of months around 9250 and 9500 the market pulled back then proceeded to advance by some 500 points each time. With hindsight a great buying opportunity, no so easy to do at the time though…….!
Curtis,
Great to see your resurfacing, i always enjoy your insights and thoughts on trading.
My journey as a trader, originally began as a fundamental “follower”, then began in earnest as a technical analyst and then morphed into a discretionary trader who learned through pain and heartache the value of systematic rules and objective measures in the form of trend following. Im currently morphing into the belief that all three: quant (fundamental), technical (patterns) and system trading (technical discipline) all work best when the strenghs of each can overlap. Fiding the balance is the key to me. Letting the system work, while the experienced hand / gut gently keeps a watchful eye to determine when it is needed to enforce a kill switch, rejigger the portfolio etc…
Your upcoming book, appears to point towards this overlap. In your post you talk about psychological resistance levels….Im curious, as to how you feel in every day practice, system trading and psychological gut trading can co-exist. My failed experiment as a discretionary trader, failed in large part to reading too much into the wiggles of price action – being misled by my gut so to speak. How do you propose that one can safely inject their gut into trading and keep it under control and avoid the “ego creep” of gut / discretionary trading. Its a delicate balance indeed and one that I’m currently trying to define.
Any insights are greatly appreciated….look forward to reading the book?
Lastly, is the melding of system and discretionary common place in your experience?