Market Repeating Historical Trends Of 2020?
Is there a reason for this market rhyming with historical market trends?
We’ve often heard it said, “the more things change the more they stay the same.” There may be a lot of truth to this in the trading world considering current market conditions.
While there appears to be substantial adherence to the patterns of yesteryear, our traders understand the market has a mind of its own and can go in any direction at any time. Simpler’s traders don’t cling to the trades of yesterday if they no longer perform for them today.
Simpler’s traders have noticed “sentiment” in the overall market may have a tendency to rhyme with patterns from preceding years (that reason to the rhyme). This means that taking a closer look at historical charts may be worthwhile to traders attempting to make sense of the rally this week.
Traders looking for the bottom to drop out this week were surprised by a sudden rally in the S&P 500 and the Nasdaq. Will investor euphoria hold into the holidays?
Only technicals, signals and time will tell.
Simpler’s traders are looking for steady trade setups to take advantage of this market bounce and — if the opportunity is there — target actionable sell signals that provide opportunities to add shorts.
A break in the low of the high daily bar might get Simpler’s traders in the mix of a few bearish plays — which would be a nice place to be in this wildly choppy market.
Caution is a strategy here.
If the signals aren’t in place, traders could jump in late in the trade and that is just exactly where they don’t want to be — on the wrong side of a change in direction.
Simpler’s traders are letting the indicators guide them before they are convinced the market is holding to this week’s uptrend. Traders saw 2020 markets rally in August, with a flush move in September, followed by a rally back in mid-October.
This year the market has been closely following a similar pattern.
While Simpler’s traders have an idea of market movement, all bets are still off the table — until this rhyming market presents a solid direction.