Hi Everyone
Ugly charts prevail right now. Many bull flags have been turning into rounded tops and early market gains have wilted as the trading days reach their close.
These are not the signs of a strong market, but for us we still need the patterns to shape up neatly until we trade them. Remember the first rule of trading is to contain your losses. The Flag-Trader method achieves this and keeps us out of trouble. The next step is to take full advantage of the neat patterns when they appear. Often they’ll appear all together, which of course is one of the signs we look for.
It won’t take long for the next wave of consolidations to happen, and if last June was anything to go by, then we could be in for a real treat.
Last June the markets fell precipitously and Flag-Traders had a bonanza. Let’s hope we can have another one next month.
Even stocks with very strong fundamentals like CERN have rolled over and turned ugly, despite strong earnings and, up to a couple of weeks ago, a nice pattern.
Logically this points to a downturn, but you cannot try to predict. Anticipating is fine, but you must still only trade what you see. I’m going to be taking a very close look at the neatest bear flags that emerge over the next week or so, while keeping an eye also on the S&P500 and Dow30 to get a sense of how the wider market is performing.
Bye for now
Guy