Tackle Today: Where the Charts Stand Now
July 1, 2022
«Heed the Pivots.»
Sometimes we make things more complicated than they need to be. You don’t need to be a Harvard-trained economist or a world-class mathematician to be a good trader. All you must do is follow the pivots.
And by pivots, I mean the swing highs and lows that form on price charts. There aren’t unlimited permutations. In fact, there are only six.
- Higher pivot highs are bullish.
- Equal pivot highs are neutral.
- Lower pivot highs are bearish.
- Higher pivot lows are bullish.
- Equal pivot lows are neutral.
- Lower pivot lows are bearish.
Determining your market bias can be as simple as following the pivots of the S&P 500. We recently completed a lower pivot low followed by a lower pivot high. That’s bearish. Now we’re three days into a selloff, and bear trades have the upper hand. The overriding question in your mind should now be, “which pivot low forms next?”
- Will we see a lower pivot low (that breaks $362.17), signal a resumption of the downtrend, and maintain a bearish bias?
- Will we see an equal pivot low (prices test and hold $362.17), signal a neutralizing of the downtrend, and thus justify upgrading your bias?
- Will we see a higher pivot low (prices bounce before $362.17), signal a weakening of the downtrend, and thus an even stronger upgrade in your bias?
Time will tell. Feel free to absorb as much information as you want. But if you’re a short-term trader, then never forget – it’s the pivots that should drive your decision-making.
Video of the Day: Trading Concept Check: What Are Pivots
Why are pivot points important to traders? Because they define price thresholds and trends. Watch this quick video to make sure you understand the concept and take advantage of the comprehensive S.T.E.P. #SwingTrading System training over at tackletrading.com and learn all the secrets of successful swing trading.
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Chart of the Day: S&P 500 ($SPX)
Pivot followers are bearish. The chart demands so. Where the next pivot low forms will determine if a change in bias is needed.
Options Theory: Overcoming Bullish Bias
I received a wonderful question on how to overcome or at least deal with bullish bias. Obviously, with stocks suffering the worst first half of the year since 1970, anyone with optimism in their eye has been battered and bruised. But it’s not always so. Indeed, it’s usually pessimists that get punched. As I’ve seen so eloquently put before,
“Pessimists sound smart. Optimisms make money.”
Today’s line up
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Halftime Report 12:30 PM EST
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