Stock Market Worries?
Probably most trend followers were long the Nasdaq and SP 500 for a nice trade. My methodology had me exit yesterday albeit with a nice profit. However from a fundamental perspective there are possible reasons that the stock market is looking fragile. The negative news out of China and Europe don’t help either. Some issues that I have taken notice are
1.The AAII bullish percentage went up to 58% last week thus making a three-year high.
2.The CBOE equity ratio was low at less than .60 for eight straight sessions through the end of last week…one of the longest period since the spring when it had been low for 25 days.
3. The RSI for the Nasdaq rose to the upper 90’s. As much as this can continue this is a yellow light.
The crowd always gets it wrong. Trend followers do not follow the crowd. They follow a thought out planned methodology with exact rules on when to buy ( sell)…how much to buy ( sell) …when to exit with a profit as well as a loss. The odds are in the corner of the trend follower. I would personally never thought the stock indexes have such a great move from the fall. I simply followed my plan & disregarded any of my personal thoughts. My personal thoughts have never made me money. Trend following has been a lifetime strategy of compounding money.
Futures trading involves risk. People can and do lose money