As we close out a stellar Q1 at Zenolytics, I want to highlight one element of trading during this quarter that deserves everyone's attention as we head into Q2.
For reference, this was a tweet from early in the quarter, on January 19th:
Turns out this resistance area on the NDX was indeed the spot, as once it was touched, the character of the market shifted entirely.
Here is the NDX chart after today with the same trajectory sitting in red.
Not coincidentally, the red trajectory marked the ceiling for this rally for entirety of the second half of Q1. Certainly within the realm of possible outcomes for a rally that very few saw coming in the first place.
So what now?
Q2 gets exponentially trickier. What we have seen during the past few weeks is but a preview of what to expect during the months to come.
Price action will be much more choppy.
Leaders will rotate dramatically.
Investors who fail to be agile with their trading will be run over completely.
What the pause at the key red trajectory signifies is a market that is preparing to go to war with investors. That war will involve numerous whipsaws prior to the market finally deciding on a direction from here.
A high probability exists that the direction will be up.
Prior to that taking place, however, there will be numerous whipsaws and misdirection plays that can be taken advantage of through the right allocation decisions at the right time.
The easy part of this rally is behind us.
Spring trading has always been a difficult proposition for investors, giving birth to sayings like "sell in May and go away."
While we have no plans of going away at any point soon in this magnificent bull run, it would be wise to guard your gains during the weeks and months ahead.
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