VIX CLOSED BELOW 40

The VIX closed today at 39.70. This is a key indicator for any bullish move in the future. The VIX measures the fear in the market place. A rise in fear usually translates into a fall in the market. Even though the major averages only rose a little bit today, this sharp drop in the VIX signals an increase in confidence from the bulls. In the short term the market could sell off a bit (its had three straight "up" days), but this drop in the VIX (combined with the breakout above resistance on the DIA, SPY, and QQQQ) could lead to a continuation of this bullish run. Trade management and money management is key to making money in any trend. Although we see the bulls getting stronger and stronger each day, we could get some news that comes out from some of these companies during their earnings releases over the next month that could change the direction of this trend. This is why our stop losses are so important. Avoid getting into these trending stocks too late. Take AAPL for example. It has moved up about $9 since I mentioned this pattern on March 26th. Although I think it could go even higher, I would never enter a new trade from where it is at right now. I would want it to pull back a bit. It is due to pull back. It has moved up three days in a row...with each day being a smaller move than the day before. Wait for a pullback. Some of the trending stocks I have mentioned in the blog have pulled back a little and could be even better patterns than when they were first mentioned. Still other patterns may have reversed their trends or moved below key support/resistance levels. It is wise to stop yourself out of patterns that have failed or aren't working according to plan and get you money into ones that are working. You are getting a good education as to how to trade these markets. Sometimes my outlooks or predictions are dead on...sometimes they are way off. Our job is really not to be market psychics. It is to look at the probabilities and the trends and manage those trades with sound money and trade management techniques. We want to look for signals or clues that can give us an edge or just keep us from getting to far to one side (bullish or bearish). I will look at some scans tonight or tomorrow and list some trends that I like. Have a great weekend.