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Looking for evidence of a bias

I advocate not to predict the market and its move. I advocate not to get into looking for evidence to confirm your own bias. I must admit that I am now guilty of doing so.

It is difficult to stay unbiased when a trader has certain positions and you wish the market would do what you wish for in order to turn those positions in winning ones.

I admit, I am doing exactly that in a desperate searching for justifying my trades. I am guilty of looking for evidence that my expectation of continuous bullish trend is correct.

However, I keep telling myself to prevent myself being attached too much to the analysis and results I just searched for. No matter what I find about the market I must stay free from overly expecting its next move and be disappointed if it doesn’t happen. Empty your thoughts, your head and trade what you see; not what you believe or what you expect to happen!
 

A recent port by Forbes contributor John Kosar there is another way to look at the market to determine the next direction of the market.

Semiconductors.

It is said that semiconductors usually lead the way to the upside as well to the downside. Per John, “Semis tend to be the “tip of the spear,” leading the way in both stock market uptrends and downtrends. This is because they are the “fast horse” that investors want to be on to capture some relative outperformance versus the overall market during stock market advances, and are typically the first horse they jump off of when the market weakens, often in favor of more stodgy blue chip stocks.”

Semiconductors struggled to make new highs recently as they were bound in a range:
 

SOXX
(Source: Forbes)
 

Semiconductors (Nasdaq GIDS: SOX) broke a major resistance at 1362 lately and that makes the resistance a support should the new support hold, of course.

If you check the chart by the end of the day it actually retreated from the new highs which makes the move questionable. But, it also makes it hopeful.

With a low volume pullback today I can expect that this is again in favor of just a small pullback and not a reversal of the trend.

 
SOXX
 

However, next few days will show where are we going. Heading down to re-test previous lows (<50% chance) or bounce off of the 50 DMA and continue creating new highs as I expected before.
 





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