Wednesday, April 03, 2013

A change in the air?

When looking to determine in what direction your bias should be, I not only look at the charts of the indices, but also at the results being churned out by the scans I use, as well as the current performance of my own positions. In the last couple of sessions, there has been an erosion of open profits on long trades, as well as some stops being triggered, as well as significantly more short signals appearing on the scans compared to longs.

While the Dow and the S&P are at or close to all time highs, the Russell 2000 covering the wider market is some way off its highs, as are the FTSE and the German DAX, despite a strong day yesterday.

It is too early to say whether short signals on the indices themselves will be given, and if they are, whether they will be sooner or later (trend followers don't predict), but by referring to the performance of your own recent positions, combined with the quantity and direction of any new trading signals, you may get an early warning of a trend change.

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