Wednesday, April 15, 2015

Stocks breaking out?

Yesterday, I discussed how the NYSE index was making a 5th attempt in 9 months to break above the July 2014 high. Today, about half way through the trading day, the NYSE index has finally overcome this stiff resistance level. Let's take a look:

Today's development doesn't mean an easy and straight path up. We should expect, as we always should, tough retests. We must also be ready for a reversal of the breakout and even pattern failure. Anything is possible. Indeed, stocks may retreat by the end of today and the NYSE index may close below the resistance that it overcame just hours ago.

That said, a strong, decisive, and sustained close above the July 2014 high suggests another advance for stocks.

If a trader is bearish, and I understand why a trader might be, this development will be frustrating. As I have noted, I am amazed at the historic run the market has been on since the March 2009 low. But it is futile to fight the market. Of course we know this, yet we still fight it because of pride, envy, greed, anger, denial, and other emotions that come with trading. We can always sit out and protect our capital when we are confused and emotional. There will always be more good set-ups to trade.

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