Some may say another blog on technical analysis and trading is just one more sign of a market top. But I say, if you're trading the trend then it doesn't matter where the market is. Yes momentum indicators are extended and yes there are plenty of reasons why investors should be cautious. But identifying the trend (currently its easy to see we are in a bull market) and trading with the trend is most rewarding.
When the trend changes the market will feel different. There will be a few failed rally attempts, and eventually we will make a lower low. Thats when the trend changes and you can choose to just liquidate longs or both liquidate and play from the short side.
There are many technical indicators - and yes I will get into plenty of them in the posts to follow - that may shed some light on future direction, but technical indicators can remain extended for some time. Therefore don't rely just on technicals. Eventually you will come to rely on many factors, including psychology (which can often be read through volume), sentiment, breadth, and good old-fashioned gut.
Hopefully this site will get people talking, provide some commentary on posts that I will quickly respond to, and shed some light on aspects of trading or technical analysis that can be confusing, murky, or highly disputed...reaching your final destination is great, but its the journey that provides so much fun!
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