Friday, March 18, 2011

A tricky week

The last couple of days have seen a lot of the open profits from earlier in the week be lost. You will recall that my system gave a short signal on the major indices last week, PRIOR to the tragic events occuring in Japan. This was also the first time this year that I was able to be 'fully loaded' in positions up to my maximum risk levels.

Pure trend following systems (such as my own) do not take account of any form of news, fundamental data or earnings releases - price is the sole piece of information that we need to refer to.

The positive from the last couple of days is that, with the exception of one earnings related release on a US stock, no stops have been hit, and on a daily chart perspective, the downtrend on the major indices looks intact.

The next few days will be interesting to say the least. Will the downtrend re-assert itself? Or will the news flow from Japan (and Libya) determine the direction of the markets? As always, I will simply continue to monitor price regarding my trading, but in the meantime will also continue to watch the news and sincerely hope that the situation in Japan does not get any worse.

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