Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

When To Trade And When To Do Nothing

By Michele SchneiderStock MarketsMar 22, 2021 01:03AM ET
When To Trade And When To Do Nothing
By Michele Schneider   |  Mar 22, 2021 01:03AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items

The easy answer to this question is if you do not know what to do, you should probably do nothing. But it gets more complicated if you do not know why you should be doing nothing.

No one likes to feel as though they are missing out on profits by not participating. Taking that in mind, here is a way you can look at the major indices and come up with a clear plan of action.

Indices Daily Charts
Indices Daily Charts

The above daily charts are of the four major indices including the Russell 2000 (IWM), S&P 500 (SPY), NASDAQ100 (QQQ), and the Dow Jones (DIA).

Simply put, we are trying to figure out what each index is doing and if they are moving together or not. A movement in unison makes it easy to discern the path of least resistance. If they are not moving together, this is equally important as it shows us that the market is confused or choppy.

Currently, the SPY and IWM daily are pulling back towards support of their 50-Day moving averages. The DIA, while stronger than the rest, has also pulled back some. Because the DIA is far from its 50-DMA it would make more sense to watch its nearest support area around $320. On the other hand, we have the QQQs, which tested the resistance from its 50-DMA and failed to stay over.

One important thing to note is that all the indices’ moving averages are sloping upwards and 3 of the 4 are in bullish phases. A bullish phase is when the price is over the 50-DMA and the 50-DMA is over the 200-DMA. Both reasons keep our current market stance bullish.

To boil all this down, we have 3 indices moving together on a pullback with the fourth (QQQ) recently failing a pivotal point.

We have also seen some choppy price action as both IWM and SPY have flipped back and forth between green and red days last week.

Today, we will keep a bullish bias but also know the pullback could continue. If the market moves lower, we will watch how the indices behave when they approach their support area. If instead, the indices rally back up, we will watch how the QQQs perform near the resistance of the 50-DMA and if the other 3 are moving upwards together.

Because of the choppy conditions, if we decide to take any trades, we can reduce our normal trading size and therefore reduce our amount of risk and exposure to the market.

With that said, if the indices continue to have divergence, having patience and doing nothing is never a bad choice.

ETF Summary

  • S&P 500 (SPY) 385.37; next support the 50-DMA.
  • Russell 2000 (IWM) 219.13 next support area from 50-DMA.
  • Dow (DIA) Next support 320.
  • NASDAQ (QQQ) Watching for this to hold current price level as the next support area is around 300.
  • KRE (Regional Banks) Closed over 68.41 support area.
  • SMH (Semiconductors) Needs to clear the 50-DMA at 237.95 and hold.
  • IYT (Transportation) 245.46 support from recent low.
  • IBB (Biotechnology) 160.72 resistance. Support 144.30.
  • XRT (Retail) 85.69 support.
  • Volatility Index (VXXWatching for consolidation.
  • Junk Bonds (JNK) Sitting in no man’s land between 50-DMA and 200-DMA. Watch for more consolidation/direction.
  • LQD (iShares iBoxx $ Investment Grade Corp Bond ETF) Needs more consolidation and recently moved into a bearish phase.
  • IYR (Real Estate) Watching to find support between 88-90.
  • XLU (Utilities) 64.19 resistance. 61.88 -61.20 support area from major moving averages.
  • {9227|GLD}} (Gold Trust) Showing good consolidation over 10-DMA of 161.69.
  • SLV (Silver) Holding over the 10-DMA 24.12 is a good sign.
  • VBK (Small Cap Growth ETF) Like to see this move back towards 50-DMA at 284.57.
  • UGA (US Gas Fund) 29.53 50-DMA next support level.
  • TLT (iShares 20+ Year Treasuries) Needs to find a base/support level.
  • USD (Dollar) 91.37 new support.
  • EWW (Mexico) Needs to get back over 44.43 200-WMA.
  • MJ (Alternative Harvest ETF) 25.10 needs to clear.
  • WEAT (Teucrium Wheat Fund) Inside day.
When To Trade And When To Do Nothing

Related Articles

Jani Ziedins
Why Bears Keep Getting It Wrong By Jani Ziedins - Dec 03, 2021 1

Surprise, surprise, the S&P 500 recovered from Wednesday’s massive intraday reversal. Okay, no one was really surprised because Thursday’s 1.4% bounce was the market’s third...

When To Trade And When To Do Nothing

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (2)
kenny brian
kenny brian Mar 23, 2021 4:21AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Thank you for you dedication
Bubba Born
Bubba Born Mar 22, 2021 9:46PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Very impressed with your analysis. It is simple to understand and concise.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email