There are two interpretation of this level. Some say it is too high and overbought and some say it is not high, there is still more place to gain. I am supporting the second option. Until we don’t see any fact which proves the bulls are dead and the bullish trend is not violated we are only on the long side.
Just a short story about the clashes of two cultures:
I have a good friend who told me around 10-14 days ago he shorted SP500 and DJIA because it was overbought, so needs to come some corrections. I argued with him and I said honestly I doubt that and last Friday I had a discussion with him again and he still expected the correction and holding his short positions. I don’t know how much money he had lost, but my concern is that he is stuck to his idea against all the facts.
I do really hope hope by this morning he revises his view and close all the shorts and not hoping anymore in a miracle. He has been merely waiting for some kinds of magic. But, praying and hoping works in the churches not in the markets. I remember well when I was rookie I prayed and asked God thousands of time, please help me turning out with profit on that certain position. I did this quite regularly, each week maybe each day because I was sitting quite often in a loosening position and I was desperate and I had anger about the market.
Since I accepted the rule of the market - that means it is always moving in trend and don’t argue with that momentum, just follow that. Don’t try to sail against the major trend. Don’t be on both sides of the market because there is only one winning side of the market, the Jedi-side, the side of the direction a trend.
If you understand that, you are going to be much better trader and your life as a trader will be more easy and pleasure. Don’t try to catch both sides, because the market in a bullish trend could be far more irrational than you and I can be solvent.
The BFM Assets Team.
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