One of the weaknesses of my trading method – and there are not very many – is that SRVs are data dependent. Meaning that historical data is necessary to compute the short term SRVs on which we construct our trades.

Rarely, but it does happen, a market reaches an all time high. Such is the case in the E-Mini lately. The S&P has been making all time highs.

So we have to make adjustments to our trading method because we have no SRVs above an all time high.

We have to use Bollinger Bands to replace our SRVs above all time high values in price. We still have our SRVs when price retreats back into historical data ranges – which it tends to do very often.

But price can continue keep going up – until it does not.

Our other technical indicators assist us in determining our order entry and exit values, along with the Bollinger bands, in these situations.

Price may continue going up for awhile – but we are concerned that price is reaching a point that cannot be supported by fundamentals.

Yes, we are technical traders, but fundamentals ultimately will dictate market price. In situations like the present, we trade technically, but in times like these with greater caution. When the market is getting really high we are more comfortable in a short position than a long position – even for a short term trade.

 

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