On May 29th and June 10th I discussed the S&P 500 BUNKER BUILDING & MISSILE LAUNCHING and the need to PATIENTLY WAIT for either.
What has happened since lends credence to the age old Wall Street adage for longer term investors of SELL IN MAY AND GO AWAY.
However, as we have discussed in the previous posts mentioned above, traders have opportunities but we have to be more particular about stock selection and more nimble about the duration of the trade.
Let’s look again at the charts.
JUNE 10 S&P 500:
JULY 10 S&P 500:
What looked in early June to be a possible missile launch fizzled out over 10 days as we moved all the way back down to the lower support. My upper resistance line and my lower support line were both tapped within a five day period (please note I drew these lines BEFORE this happened).
The market is now fighting over the significance of the 200 SMA (200 TANKS), the bottom support price and whether or not there will be more follow through on the HEAD AND SHOULDERS pattern that has developed here.
What we are experiencing is TEMPORIZING or ENTANGLING ground; therefore, traders should be very particular about the stocks traded, the time frame traded, and the duration of the trade, not to mention the volatility of EARNINGS SEASON.
One final note: be particularly careful when trading on the weekend.
