Last Week's Late Rebound Shouldn't Surprise Traders
Jani Ziedins | May 29, 2023 03:25AM ET
The S&P 500 popped 1.3% Friday, extending Thursday’s gains, and the index closed at the highest levels in nine months. Not bad for a market that was in freefall three days ago.
This late-week rebound shouldn’t surprise readers of this blog. I warned bears on Wednesday to protect those mid-week profits:
Until further notice, we keep trading against these swings. That means this week’s swoon is a buying opportunity…[J]ust like how bulls got stung this week, bears pressing their shorts are making the same mistake. This is the kind of market where if we’re not taking profits, we will be taking losses a few days later.
And wouldn’t you know it, here we are two sessions later, and greedy bears let those nice profits turn into painful losses.
This game isn’t hard to figure out once we recognize the patterns. This is not a directional market, it is a choppy, sideways one. Anyone betting on the breakout or breakdown is getting chewed up and spit out a few sessions later when the market reverses.
People who claim this market is fixed tell the rest of us they have no idea what they are doing. Obviously, this is a choppy, sideways market, and it is no one’s fault but our own if we let a bearish or bullish bias wreck our trades.
That said, there is an upward drift to this sideways, choppy trade. The gains are bigger than the losses, and that drift will continue next week. I will still be taking profits following big moves, but I’m riding this up wave a little longer.
Buy low, sell high, and repeat as often as the market allows.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.