I have had several conversations recently with swing traders, who use technical analysis, about the difficulty in trading this year. Most of us are at or near break even, that is assuming we have good risk mitigation. Those who do not, the cowboys, are not fairing as well. The following two charts give some insight into why this is so. The first chart shows the SPY this year to date with the price plotted with a line and the 50 day simple moving average plotted in light purple. The second chart covers summer and fall of 2014.
Note how the price has whipsawed up and down through the 50 sma every few days this year. SPY has struggled to hold even a 50 day trend. During April, price went through the 50 sma seven times! When you look at the chart for last year, you can see that price stayed above or below the 50 day moving average for several weeks at a time. The lack of trend in 2015 is chopping trend traders to pieces and support and resistance traders are chasing an ever consolidating lack of support and resistance. As a result, individual stocks are struggling to follow through on their technical patterns. I remind myself that this is temporary and we will revert to the norm at some point. I would welcome a good sell off so that we can get back to a trending market, but for now, I will stay mostly on the sidelines. Here are the charts.