Married Lonely

Institutional stock traders have focused on trade the trend investors like us. In icy, evil, fashion, Institutional stock traders are dumping into the up swings and covering shorts into the down swings to compact the swing range too narrow for the majority of us to make money in. This has created head fakes both to the upside and to the downside over the last few days.

What has spooked bears like myself is that an official higher low is now in place with verification today.

As I wrote about last week, the life cycle of the previous downtrend channel has come to an end. We are now in no-man’s terrain while a new channel is being formed. We do not have sufficient data thus far to guess if we are moving into a sideways trading channel, or an uptrend channel.

When there is no apparent trend, then what must trade the trend stock traders do? Walk to the sidelines and the shelter of cash.

At present we have been in cash two times over the past couple of weeks and while we thought a new trend had been established making us jump back in, it turns out we were head faked and ambushed. I don’t know about you but I’m weary of getting my butt kicked by the better prepared and armed Institutional traders.

One day we might have a Traders Bill Of Rights where the theatre of war is made non-discriminatory, but for the present, inequalities continue to exist amid institutional and amateur traders such as Institutional traders have access to all limit orders, they are friends with market makers and can make non-open market trades, they have access to a faster stock data feed and can use high frequency trading schemes against us, and they use the media groups to control public opinion about a company or the economy as a whole.

Something that is additionally significant is that on the daily chart of SPY, bulls have re-taken the 50 day moving average but we still need confirmation of the break.

The error I made was leaping back in this market twice now and being incorrect both times. This implies that I must raise the bar for what I view to be a new trend forming. This means that I ought to find more bullish or bearish indicators on the stock charts than I have in the past. Even a Bearish Head and Shoulders Top and a Burial Cross was not sufficient to bet my money on the short side. Not even a Bullish Downtrend Channel break was sufficient to bet my money on the long side. Each and every one of these technical indicators have meant nothing over the last several weeks. The only thing that these indicators have accomplished is to entice us trade the trend traders from off the sidelines and into an ambush where we have been murdered by the thousands.