Exactly one week ago the markets suffered one of their biggest, one day pullbacks in nearly three months. This Thursday the markets plunged just a little more than last Thursday. The S&P 500
I write many articles that are aimed at helping people with the actual trading, or investing of assets. I may cover fundamental approaches for the long term investor, or drill down to technical strategies for the short term trader. In all the articles I have written there is usually a focus on trend. Understanding trends is a vital part of any market participants knowledge base and is key to a good start for new investors.
While last Thursday the markets briefly shocked investors with that volatile plunge, everyone was mostly calm about it as the selling pressure finished perfectly at the uptrend line. It means that even thought there was one bad day, the trend was still intact and remained higher. This Thursday's move is a completely different story. Anyone who follows trends, (and who doesn't?) noticed that during the day, the move lower once again stopped at the uptrend line. This time however there was no bounce. The selling pressure continued later in the day and this time the markets closed below the uptrend. If you remember, the uptrend began the night we found out Trump would be president way back in November. Since November the markets have trended perfectly higher. You can perfectly draw a line marking the first low set in mid-December all the way through the low of last Thursday. Every time the markets pulled back to that line they bounced immediately.
While nothing trends higher forever, this time traders have a perfectly obvious trend that came to an end as of this Thursday. This does not mean the market's collapse however. It means a period of rotation. Maybe a period of volatility, and then a focus forward to whatever will happen next.
