If you have rules stick with them traders (you should have rules traders) no matter what! The best traders are the the traders with the best discipline not the best trading skills.
For a discretionary trader A healthy doubt in your trading skills is the main reason you make rules. This healthy doubt should be the same reason you follow your rules. I have another rule that says : Respect The Engulfing Bearish Or Bullish. Below is the $compq daily chart...
I've been reading the work of Austrian economists Ludwig von Mises and F.A. Hayek and lord help me but I think I'm becoming an Austrian! This can be detrimental to a trading career because the market responds so strongly to Keynesian economics. The trick is to follow trading rules no matter what you "think" or what ideology you follow. But now it seems like the whole market is turning Austrian. Granted the money hasn't been given to Spanish banks yet so that definitely put a damper on the rally as the banks didn't have the added fire power to take it the next level. But still it seems like the thrill is gone. Even with a deeper EU plans of unification the question of sovereigns taking on the risks of economies lingers and zaps the apatite for risk in the markets. The Keynesian experiment seems to have come to the end of it's effectiveness.
This could be the reason the ECB is so reluctant to turn on the printing press. Maybe they look at us and see a failure of Keynes' philosophy. In defense of said philosophy little or no growth policies have been brought forward so the economies of the world are running on half a cylinder. Our policy makers here in the US have taken the election year off it seems. The GOP is still intent on keeping this economy sluggish to help them get control of the government. So it now looks like this year is a wash and the market knows it. China tried to bolster growth with it's rate cut and it may work but the effects won't be felt until the end of the year probably, if it works at all. If you've been following this blog or my twitter feed you know I've been optimistic but the glass can only stay half full for so long.
Without fiscal union in Europe in the form of deposit insurance controlled by Brussels, government spending controlled by Brussels, growth policies coming out of Brussels, and ECB printing, the market will put emphasis on EU problems. And that's not to mention keeping Greece in the Euro. If Greece leaves the Euro the rest of that stuff is for naught because the exact thing they're trying to avoid will happen... A fire sale to raise capital. Even if the Fed tries to come to the rescue the liquidity trap will sop up everything they throw at it. People expect it to get a lot worse before it get's better so unless the Fed is willing to step into the market and take the $spx to 1500 and beyond multiples will reflect bad expectations. At least until November when we find out who the POTUS will be. In other words without a large coordinated effort the jig is most definitely up.
With that said there is a slightly bigger brighter picture being painted on the charts. Here's another $compq daily chart zoomed out a bit:
Until next time traders follow your rules and happy hunting!!
I'll leave you with one of my favorite songs from yesteryear's and i dedicate this to economies the world over... Enjoy!