If you trade with any frequency, even weekly, you probably have a routine. Read some headlines, pull up a few charts. Scan for anything that catches your eye. Typically, the things that grab you are big moves. This index shoots up, that stock plummets. But what I almost missed this morning wasn’t a move up or down. Take a look at the S&P:

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Since the holiday weekend, the S&P has been locked into a pretty tight range. This is a sign traders are looking for some clarity to make their next move. Treading water as is may be. The longer people sit tight, the more dramatic the next move typically is.

We can see that we are sitting right on the 10 day moving average with the 50 being pulled in. If we also look at the MACD we can see it starting to show a bit of weakness at this level, but also leaving room to the upside. The right spread trade could be a ideal plan.

Trying to get a sense of where this momentum will launch to isn’t for the faint of heart. This is a great time to brush up on classic momentum setups and get some ideas on how to set up trades for this exact environment.

Joe Duffy put together a quick little guide that spells out some of the most effective momentum setups. You can grab it for free here.

Keep learning and trade wisely,

John Boyer


Market Wealth Daily