A Tale Of Two Markets: Bullishness vs Bearishness

Every day is a new day on Twitter-verse for investors.

It’s full of news, agendas, and traders with positions (bias).

Those that do well on Twitter tend to be either very biased (bullish/bearish) – play to a crowd – or traders that see and trade both sides.

The latter is helpful with active investing and trading because if you’ve been active long enough, you realize how important it is to check your ego and emotions at the door.

Yesterday, I shared two charts of the Russell 2000 (NYSEARCA: IWM) on my Twitter feed.

One was a “bullish view” and one was a “bearish view”. It was a psychological test of sorts.  See below.

$IWM – Russell 2000 “Bulls” argument – Above near-term support, at 50 day MA, and MA’s trending higher. Consolidating near highs. pic.twitter.com/9FirYXAIVJ

— Andy Nyquist (@andrewnyquist) August 13, 2018

$IWM – Russell 2000 “Bears” argument – Rounded top taking shape. Heavy down day broke through multi-day trend line. Losing momentum. pic.twitter.com/eQYMtA5X94

— Andy Nyquist (@andrewnyquist) August 13, 2018

The charts are a day old, and it’s worth noting that the Russell 2000 is up today.  So did the bulls win??  Maybe if you’re a day trader and you bought at yesterday’s close…

My point? Timeframes are very important.

The Russell 2000 trend has not turned down yet (some may define that as the trend line $160-$162 or 200 day MA at $157).

And at the same time, the Russell 2000 has not broken out yet (+$170).

Some may apply a 1 or 2 percent rule to breakouts and breakdowns.

On shorter timeframes, the same holds true… $170 is overhead resistance and $165-$166 is support (50 day and ST trend line).

Patience. I wrote a post about “Why The Broader Market Isn’t Ready To Breakout” back on July 20. The S&P 500 is up a percent since then, and the Nasdaq and Russell 2000 are flat.  Some marginal improvement, yes.  I am still on the long side in my portfolio but have plenty of cash and staying picky. I’ll provide an update to that post later this week.

It’s still a “pickers” market.  Be picky.

Twitter: @andrewnyquist

The author Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.