Bullish Movements Continue To Push Indices Higher
Bill Poulos | Mar 01, 2019 07:18PM ET
This week we came to the end of another month and began a new month in the markets. This is a great time to review how things have been going in your trading. After a strong sell off in the month of December, the first two months of 2019 have been remarkably strong. This strong bullish movement has given many opportunities for setup in the stock and options market. Take some time to go back and look at the trades you have made to make sure you are evaluating the markets properly and entering into and exiting the trades as planned. If you see that you are not following your rules like you should, this is a good time to change so you can begin following them.
The hot topics of the week continue to revolve around the trade talks with China. We have also seen much discussion around the summit with North Korea and whether or not we will see some type of nuclear disarmament agreement between the two countries. As of now, nothing was signed and the two walked away without anything firm set. We are likely to see continued negotiations over the next few months. It is important to recognize that these types of news events can cause the markets to react in a volatile fashion. As always, make sure you place your risk level at appropriate places.
Let’s take a look at how the markets performed this last week.
h3 DJ-30/h3 h3After nine weeks of bullish price movement in the Dow Jones 30 Futures, this week we saw the first real signs that prices are wanting to pull back. The strength of this move has been fairly significant and is getting to the point where we would expect seeing a bit of a pullback, if not an actual retracement. While this week's move is not anything to be too concerned about, we do want to watch for more evidence that a sell-off may be getting ready to start. Currently, the weekly 50-period simple moving average is turning up which shows us that the trend is continuing to be bullish. If we do see a move back down, it will be reasonable to expect price test out the breakout area as support. Also, notice the letters A, B, C above the price peaks on this chart. These represent areas where price may experience resistance in breaking through.
h3 SP-500/h3
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On the weekly chart of the S&P 500 you can see a similar pattern to what we saw on the DJ-30. Price is above the 50-period simple moving average and this moving average is now trying to move higher. One difference between this chart and the DJ-30 is that it has already moved above the point A level. This is a sign that the bulls are wanting to continue to push prices higher.
The weekly chart of the NASDAQ also shows a strong move and has confirmed last weeks move by crossing above the A point also and is above the 50-period simple moving average. We also see that the 50 SMA has now turned up. While this move is strong, we want to watch to see if we can identify signs that price is going to weaken. For now, we don’t see much in the way of weakness.
Overall, the markets continue to have a strong bullish direction and are not showing that it wants to change. We will continue to monitor to look for things that may suggest the bullish run is over. Make sure you take some time to review your trading and keep your risk at appropriate levels in each of your trades.
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