Trend following Stock Market Question
After a decline as large as we saw in the last week a rally is to be expected. The key in my mind now is the 200dma on the COMPQ. The index is now 2% below this moving average which is now resistance. If the index can break above this level with some strength it might have a shot at returning to recent highs or even a new Bull Run. If it can’t then we should see lower prices.
What does this mean…Have a trading plan. Both Bulls and Bears have been hurt over the last week. I have fielded many calls and the bottom line was most did not have a trading plan. My students have avoided all of this for the most part. They have exited and now sitting on the sidelines with out any emotions waiting to see what to do. One does not need to be in the stock market at all times when trend following..