Momentum Monday – Range-bound Market

The charts on Momentum Monday are powered by MarketSmith

The S&P 500 (SPY) is currently stuck in a range between 280 and 290. The fear of missing out is above 290. A break above 290 would very likely lead to a quick rally to 295-300. The panic is under 280. If the index loses 280, we will probably see a swift selloff to 270.

Trading in a range-bound market is not easy. It often requires playing the ranges which is counter-intuitive to many trend followers. Range-bound markets often come with a lot of choppiness, which means many false breakouts and breakdowns on the higher time frames.

Last week, we saw money flowing to sectors that are immune to the U.S. – China trade war. Enterprise software, restaurants, biotech showed notable relative strength. In a real market panic, none of those sectors will save you but as of now many money managers have chosen to hide there.

P.S. Check out my last two trading books. Both are super practical, packed with actionable information that can be put to use right away:

Swing Trading with options – How to Trade Big Trends for Big Profits

Top 10 Trading Setups – How to find them, hot to trade them, hot to make money with them.