- Shorted more ELY (see below)
The market continued to show weakness this week. In my trading account, my shorts are starting to flourish, while longs are barely getting by. If the market shows any additional weakness in the next few days, then my EWA position will almost certainly be cut, but since I am net short, this would be a desirable outcome.
It is also worth remembering that the US market is still in a long term downtrend. This fact is easy to forget after a 40% rally in the S&P. The chart below shows a weekly chart of the S&P 500 going back 4 years:
Here are some points that come to mind as a trend following trader when I look at this chart:
- The price is below the 50 week moving average (wma)
- The price is below the 200wma
- The 50wma is below the 200wma
- The 50wma is drifting lower
- The 200wma is drifting lower
The message of the above chart is unambiguous. The trend is down.
I also noticed this week, and this is visible in the above chart, that the low for the week was exactly equal to the close of the week. In other words, the weekly candle printed this week had absolutely no lower wick. In my experience, this has bearish implications more often than not, perhaps 6 or 7 times out of 10.
So, I would say that the odds slightly favour the downside next week, although I am completely open to the possibility of the market rising as well. All I can do is assess the trend, and place my bets on the side that has the higher probabilities.
Anyway, here is the stock I added to (on the short side). This stock has made a new all time low on Friday:
