The S&P 500 (ETF:SPY)
In last week’s forecast, I shared that I expected “a lower high to form and then a push back down to break below the recent lows near $405.” The S&P 500, (analyzed here using the ETF:SPY) did indeed form a lower high and DID test the $4[5 level, but without the bearish sponsorship needed for a breakdown.
Price quickly ping-ponged back up to retest the recent lower high, and was rejected in Friday’s session. The pressures of supply and demand that I can measure have moved back closer to balance, which makes the odds for a correct forecast this week lower probability. The tendency will be for the price to flop back to the $405 lows, but unless there is a new surge of bearish energy this week, the odds for that breakdown have sharply reduced. More likely is an extension of the range until one side or the other asserts itself. With the odds for a clear forecast diminished, it’s a “risk off” week for me as I prune exposure and wait for new opportunities to show themselves.
Many traders think incorrectly that they can work longer or harder and make more money. This is NOT the right way to think of things. Instead you need to realize that “trading is NOT work…it is simply the analysis of deals”. From that perspective you will transform your returns as you stop chasing after profits, and instead seek trades that are not likely to LOSE you money!
Go back and look at your own results…how much more money would you have made in the last year if you could have avoided 5-10 losses?