Dude, Where’s My Trend?

Random Thoughts

Follow through is key. And, on Tuesday, we didn’t have any.

The Quack probed new multi-year highs before settling back to lose over ½% for the day.

The Ps gave up all of Monday’s rally and then some. For the day, they lost nearly ¾%. This action has them stalling short of all-time highs and creates a “retrace” look—somewhat similar to my Gatekeeper pattern. Email me if you don’t have my 2nd book and I’ll send you the pattern. Or, better yet, pick up a copy of Dave Landry’s 10 Best Patterns & Strategies.

If you can afford to trade, you can afford to get educated.

The market stalled but it is not the end of the world. The indices are still close enough to their old highs where a few big up days would put them back at new highs. As usual though, take things one day at a time.

Over the intermediate-term, the Ps are still trading around where they were 5 months ago.

I was once at a seminar and complained to some dude that I couldn’t catch a trend to save my life.

Dude: Have you plotted the S&P 500?

Me: Yeah, of course! Every day!

Dude: And, you haven’t noticed that it has gone sideways for months? (dumbass implied).

So, unless we see meaningful upside follow through soon, net net: we have 5 months sideways in the Ps, and around 1 month in the Quack & Rusty.

Obviously, the market is getting jerked around by the gyrations in Washington. Don’t worry about that. Watch the charts. If the market goes on to make new highs and sticks, then we will look to add on the long side. If the market rolls over-last Thursday’s low remains a great inflection point-then we will look to add on the short side. And, if things stay sideways, then we will sit on our hands.

Considering the above, continue to be very selective on new positions. Make sure you really really like the setup. Ask yourself, “Can I walk away and be okay?” Also, “Is this really the best setup since sliced bread?” If it is, then take it! Just make sure you wait for entries. In fact, use liberal entries just in case it has a false start based on noise alone. I’m not seeing many meaningful setups at this juncture so now might be the time to wait. Recently, I have seen some decent setups in foreign issues and/or more speculative (i.e. higher volatility issues). These stocks have demonstrated that they can ignore the market (and of course Washington). So, keep a watchlist here. Stocks like MY and CCIH, mentioned recently in my trading service, are a good place to start. 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. Stop me if you heard that before.

Futures are strong pre-market.

Best of luck with your trading today!

Dave