Staying on the Sidelines

The market has worked off the overbought condition of last week by basically going sideways. The gap down openings on 9/9 and especially the one on 9/10 are a bit of a concern to me. That second gap has been a resistance level over the last three days. Yet and still, the trend is clearly up and once today’s Fed meeting is out of the way we’ll likely see what the market really wants to do. The charts argue strongly that the next move will be upward.

Two of my trading rules should keep me out of the market this week. I’ll remain in cash for at least today due to the Fed meeting. I never open new positions on Fed decision days because the action is always so nutty, even when no change in rates is expected. The other rule keeps me from opening new positions near options expiration, which is this Friday. I used to hate being out of the market so much, but now I look forward to weeks like this just to give me a sort of forced vacation from watching the charts all day, every day. Depending on what the charts look like tonight, I may jump back into the fray tomorrow.