Tuesday, July 10, 2012

A bumpy ride

Despite the downward move in the general market this week, the charts show that the uptrend, while a bit bumpy, is still intact on the indices. I've shown the S&P and the FTSE below.

Due to the inherent volatility in these instruments, I avoid trading the indices and simply use these charts to determine in which direction I should be looking to trade individual stocks. Whether this trend will develop, or reverse back to the downside is anyone's guess. All you can do is either stay on the sidelines (and potentially miss out IF a big move takes off, such as what happened at the turn of the year), or use appropriate risk management and slowly start to trade individual stocks that meet the relevant criteria in the general direction of the market.

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