Since our last post on July 20th we have witnessed quite the bull run/bear market bounce depending on which side of the fence your long term perspective rests. Here at the flatbook, we don't like to trade contra-trend and as our 200-day MA on our D1 chart starts to head higher we would like to be a buyer of dips rather than a caller of phantom tops. Though we've profited from calling key points of resistance in months gone by (954.4 and 931), it is clear that the former strategy has been more fiscally rewarding to its followers since March lows.
Pertaining to our blog header, W1 charts show enduring obedience to an equidistant channel, whose upper limit first manifested itself as resistance in w41 October 2007! March lows, saw the spx touch, and duly rebound from our channel's lower limit. We will speculate then, that our next test of this channel - which could be as high as 1100- will again fail and see the spx continue to be obedient to our long term equidistant channel as highlighted below. One to watch in the coming weeks/months, that's for sure.
More contemporaneously though, the spx has been pretty much range bound - 993 to 1010 (see chart below) - and so one might be inclined to trade this range; indeed we were speculative buyers at 993.6 early this trading day. Keeping in mind today is Fed Day, we will closed the aforementioned trade and stay on the sidelines ahead of 1915GMT. The potential to piggyback a substantial move in the wake of the FOMC statement is there however, but be warned: this is not a strategy for the weak hearted!
Good luck traders!
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