And just like that, we have new record highs on the S&P 500.
S&P 500 Weekly:
This really is the mother of all bull markets in stocks, and indices traders on the Vantage FX book who keep buying the dip are loving life.
S&P 500 15 Minute:
The intra-day chart shows just well the price action respected the technicals on the breakout.
Test highs > Breakout > Re-test previous resistance as support > Daily close above resistance.
…But the top is in now, right? It’s time to start to fade it?
Well that’s what Vantage FX traders are saying at least (scroll down to the client sentiment section on the vantagefx.com homepage), with 92% of traders on our book now short the index.
But how many times are we going to fall into that trap? As we just said, this is the mother of all bull markets so why are we all so keen to fight the tide?
I’ve been just as guilty of trying to fight the trend myself. Looking back through this blog, we have this major trend line support across indices post from back in January where I was trying to position shorts for an early breakout to the downside.
The risk:reward was there, but in hindsight the setup wasn’t in the direction of the most risk. The biggest directional trading concept that I like to talk about over and over.
Now we’re back at the top of this range that’s in question and trader’s human nature is telling us to fade the edge of the range and short here at resistance.
Once again, if the risk:reward is there and it meets your own set of rules to enter a trade, then I’m not going to tell you to sit on your hands. But just remember that there is no such thing as overbought in a bull market.
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