For Those Thrill Seekers
Here we have the Russell 2000 Index and a short term selling opportunity for those willing to join the morons assocation of america chaired by yours truly. It does feel that way at times when you are a contrarian trader. In fact it feels that way often. After waking up early this am and turning on CNBC just for kicks, I realized once again that being short term bearish in any way is obviously just the wrong thing to ever be feeling. Apparently there is a rip roaring recovery going on economically. That is really here nor there and has nothing at all to do with what trades I make. Just really an observation. We do without question have a rip roaring bull market in stocks going on right at the moment. I warned people a few days ago to be careful shorting stocks.
That was prudent advice as we have started off the year with 6 straight up closes. So why am I shorting this market right here? Pretty simple. My momentum indicators that I use are showing a downward trend with price showing an upward trend. This is a divergence. As I have stated many times, in strong market divergences often do show up and carry on for quite some time. There are certain things I look for to try and filter alot of these trades. Without getting too involved, some of those are here now in other indexes, namely the NAZ and I felt the pattern in my oscillators was better here, so this is where I chose to play. This is a short term trade, I do not expect a major break from this.
It is always very easy to use the 5 year old rule and determine we have an uptrend and just do long side trades. That rule is basically if you put a chart in front of a 5 yr old, what would they tell you? Obviously they would say, it is going up you dummy. It is incredible how simple it can be, and as traders we often get so tied up in trying to create the holy grail for timing. In doing so we lose sight of the obvious that is right in front of us. I am often guilty of this. However, that guilt does bring in income with it so I live with it. In trading you have to indulge sometimes in your vices to keep them at bay. Since I like to tinker and create indicators and models, I indulge that by continuing to do it. I often do not trade live the things I come up with for quite awhile if at all. It is too easy to get caught up changing approaches from one day to the next, and you just never get anywhere doing that. Once I find something that I think is really meaningful and adds to what I am doing, I go with it.
That is the case with my bottom graph here which also confirms that we should see some downward movement here. It is just another trade, so stops are in and we will see what happens.