Perception is all about time frames. You may be right on a position, but it’s all about the time frame you trade in. You may be right too early, and sometimes so early you can’t afford to be right.
A lot of talk about the stock market going to shit has been happening for years. You’ll hear a lot of shit talking and then when the market finally takes a shit, those that were short early on as the bulls ripped up will be saying, “I told you so.” Some of them can afford it, but others can’t. A good example of this is Bill Ackman and his short on Herbalife. He had to close it at a loss as high as $740 million.
So as I look at SPY/ES(futures) I see that we are obviously in an uptrend. We’ve gone up ever since I called that I was looking for long opportunities. I was looking around the 2800 area on ES and we got close to 2796. You can’t be too precise with targets because a lot of people see the same target and they try to get ahead of it. The shorts got ahead of the 2800 area. It was a good place to exit at gains, and now I’m looking to re-enter. The direction is up for grabs. But let’s see the position we can swing on.
As you can see on the daily chart above, we’re on the upper band of an uptrend. The trend is your friend for the trend traders, so if you’re a trend trader, you should be BTFD!! (buying that fucking dip!) I’m a breakout trader…so I’m waiting for a break of a trend or range. I know we need to go back to the blue line and look! It is at the top of the trend. My money is that we hit that that and from there, we breakout! Yay! New highs….
Ooooooooor we go back down from that spot, and the bulls get caught in a trap. Let’s not forget that next week is the start of earnings season, AND quite a bit of economic news is coming out in regards to trade and whatnot….soooooo we can go anywhere.
Why time frames are important is that on the weekly, we have a rising wedge. This has been a pattern that Wags and I have been capitalizing on lately. Wags introduced me to shorting these shapes and I’m loving the new revenue stream. On the weekly, you see that we’re getting close to the tightening area and it is right at the blue line on the daily chart where it should get tighter. Most rising wedges end up in a nice short position and rarely, but sometimes, it shows a turn to the upside.
I’m looking to go long above the blue line and to short of the rising wedge pattern on the weekly. In the meantime, I’m riding the trend. Keep in mind your timeframes and what you’re trading. Don’t get too short too early or too long too early unless you can afford to be wrong for the timeframe. Be flexible, be nimble, and most importantly, be profitable.