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July 22, 2012 / redman59

Don’t Get Caught Up in the News

Below is a picture of the weekly and daily charts of the same instrument. Do these look like a good buy or sell at current levels? They are not the VIX or any double, triple, or inverse ETF.

 

After the market there was a news brought to my attention from @ibc_fn that brings some hope to the bulls. One of the most dovish Fed officials called for more aggressive policy easing. A recent post form @chessNwine titled “The Attack of the Short-Killer Hot Tips” also mentioned this but also gives information to keep in mind.

For me this is all a reminder to keep your time frame in mind. I personally have been daytrading positions in this recent market as the volatility is perfect. But with the daytrading, it is a reminder for me to stay out of swing positions as the day-to-day volatility would more than likely whip me around and the news is too much right now. Any amount of good news could cause a violent reaction to the upside or we get the continued selling looking for the forced liquidation of funds.

The above charts are inverse charts of the SPX. I state the reasons why I like the charts here. With many traders being long bias, it is a good way to look at the chart from another perspective with your bullish chart pattern mindset.

Personally I am still looking for things to settle down some and waiting for this news to dissipate. The correlations are getting to be too much between stocks and the news. Also, what always seems as positive news could also lead to more selling after the news as @chessNwine states in his post:

“It does not matter what you or I think of the possibility that more QE will be wildly bullish for the market. All that matters is what the market actually does.”

Charts serve as great reminders to forget the news event but trade the chart and what you are seeing. Who cares WHAT the news was, how did the market react. News and anything else are events and knowing the event and trading the event are two seperate things.

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