Monday ended a lot better than it stared. By the end of the day, the Quack finished within spitting distance of multi-year highs. The Ps are less than 1% away from all-time highs. And, the broad based Rusty actually closed at new highs.
Monday exemplifies why you want to take things one day at a time and be cautious not to make any big picture predictions.
Intermediate-term, the Ps are just about where there were over 4 months ago. Since they are not too far from new highs, a few big up days would make all the difference in the world.
Based on yesterday’s action, things are generally shaping up. Do continue to keep an eye on last Thursday’s low (circa 1660 in the Ps). That still remains an important inflection point. If that gets taken out, it could get ugly fast. Again though, take things one day at a time.
As a trend follower, I’m not going to argue with new highs. Therefore, as long as the market remains at or near new highs, I’m not going to fight it. Follow through is key though—stop me if you’ve heard that before.
So what do we do? Unless the market turns down in earnest and takes out last Thursday’s low, I wouldn’t fight it. Focus on the long side but be very selective since the indices have been mostly sideways on a net net basis. On existing positions, you know the routine, honor your stops. Let the market prove you right or wrong. This simple technique, in and of itself, can often keep you on the right side of the market.
Futures are flat to soft pre-market.
Best of luck with your trading today!
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