SPY makes Higher High and Higher Low 5/6/11

There are trading system signals and then there is chart reading. Sometimes the two do not exactly agree with each other. 

What is an uptrend? When the chart shows that higher highs and higher lows are being made we can say we are in an uptrend. The opposite is true for a downtrend, when lower highs and lower lows are made.

May 2nd we had a higher high and then SPY pulled back and looks like it is making a higher low. The previous low and support was on 4/18 at 129.51. The most recent low was 133.02. We will have to see if the formation shows that this in fact is a higher low. Next week’s action will be telling. But for now, that is my chart read on SPY.

On the other hand my trading system is still saying Exit on Long on 2/23/11.

What do I do? Listen to the chart or my trading system?

I will continue to stay long but will keep my hedge on the down side. I believe in first reading charts from a purist standpoint. Next I will pay attention to the trading system and what it signals. It too has a voice in the determination however and helps keep me from getting too subjective.