Thursday, February 23, 2012

Dow Jones is Suggesting Something?

If you have been reading this blog for the last 2-3 weeks, you would notice that every piece of news that came out was mostly positive or bullish about the market and its items. But this week's events thus far, especially Wednesday's market activity have brought me thinking hard. Is this time to get out? Is this volatility what my risk management tells me that I cannot stomach? Is this walking the tight rope and trying gambling instead of trading in clear trends?

So, I took out ChartNexus and looked properly and indepth-ly into the Dow Jones weekly chart for a better signal of what is to come. Of course, I do not think I am the first to discover a bearish divergence on the MACD that has occured for the last 2 weeks, and soon 3. This is not too healthy coupled with a indecisive candlestick and probably after tonight, a black candlestick to appear. Over the last few months, divergences in MACD indicator has been very accurate in forcasting price action that will follow. I have highlighted them in blue circles. 

Bearish? Well I guess it is easy to gamble on this and say hey, if it goes back up on some further good US/Europe economic news, being in this, riding this volatility out would have been great. On the other hand, ignoring these signs would be foolish.
You decide. At least for me, I am heading for the exits before something else finds me. I would be happier with my profits and reduced risk and exposure in this roller coaster ride soon.
Come what may, I traded healthily and with conviction.


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