I’ve been cautious this week.

I think we’re still in a bear market, because we’re below a declining 200 DMA.

We also remain in a highly uncertain political environment, and are in earnings season. These things affect the market on a day-to-day basis.

So, when I’m trading the long side, I’m not looking at this as: “Hey, this market is bottoming!” Instead, I think: “Maybe the market is making a bottom, but do the odds favor that?”

No. Not with a declining 200 DMA, which is above a declining 50 DMA.

So, when I trade the long side, I’m currently sticking to the shorter-term timeframes and smaller position sizes.

My job as a swing trader is to look for low-risk, high-probability trades.

I’m not looking to predict, but anticipate moves.

For example, because:

1. Futures opened with a gap lower; and

2. The anchored VWAP from the news about the 90-day pause to tariffs is currently at the same level as the 5 DMA…

…I expect this week to start with some pullback.

However, guess what? I’m often wrong!

But when I’m wrong, I don’t stay wrong. I cut my losses.

Be realistic about your market expectations.

You can’t expect perfection. Your goal in the markets should be to have a strategy — and for me, that means waiting for low-risk, high-probability setups with trend alignment.

Currently, the trends aren’t aligned. The market is sending us mixed messages, which is why I remain cautious.

I don’t mind missing a move. I really don’t.

Missed opportunity is better than lost money.

I’ve been trading for 35 years.

And I’ve learned, the hard way, that chasing extended moves—such as the one we had last week—is generally a recipe for disaster. It’s certainly not how I’m going to make much money. And I’m not interested in hindsight trades.

I also don’t care to take enormous risks to try to book nice gains in environments like this. Most people are down for the year. I’m not. My account is at all-time highs! And not because I’ve been super aggressive, but because I’ve avoided much of the carnage earlier this year.

For me, this is an environment to trade conservatively.

The S&P 500 just rallied 8% in a week.

So, what’s likely?

Are buyers likely going to continue to be excited about this market and push it up to the 50 DMA and the year-to-date anchored VWAP?

I mean, it’s possible—the buyers are still in control because we’re above a rising 5 DMA—but that doesn’t seem most likely to me.

But because we’re above the 5 DMA, I’m not looking to short just because we’ve touched the anchor off the all-time high. That’d be foolish.

Oscillators just provide levels of interest.

Whether that’s a VWAP, moving average, or Fibonacci level, oscillators aren’t buy or sell indicators.

They tell us to take a closer look at the short-term timeframes—do we have evidence of buyers losing control and sellers gaining control?

Around March 25th, the last time we touched that anchor off the all-time high, it took a day and a half before the sellers took control and price got rejected at that level.

Again, simply touching a level doesn’t mean immediately finding resistance.

It means we’re probing a level.

And while we are, be careful about new purchases.

If we do pull back, we may test the 5 DMA. It’ll be interesting to see how the S&P 500 behaves from there.

Also, the S&P 500 still has a declining 20 DMA. If we do pull back for a few days and that 20 DMA flattens out, and the anchor off the low (April 7th) starts to creep up on it, then we’ll have a solid level we can measure risk against.

Stay flexible, and have a good week!