Primum Non Nocere

Random Thoughts

The Quack managed to tack on nearly ½%. This action keeps it at multi-year highs. The Rusty didn’t set the world on fire but it was up enough to keep it at all-time highs. The Ps ended a smidge higher. So far, they still have a “retrace” look to them (read further, watch for an OGRe).

Yesterday, I discussed the damned if you do, damned if you don’t dilemma of overbought markets. To recap, if you buy them, they correct and take you out with them. If you don’t buy them, then overbought becomes super duper overbought and you’re left behind. So, yesterday the market went up and futures are up big pre-market, so you see, I was right, damned if you don’t!

Seriously, we’re in a dangerous environment. The sharp “V” shaped recoveries are a tough pattern to trade. As I preach, by the time the market gets all the way back to new highs, it’s overbought and due to correct. But, you can’t fight a trend just because it’s overbought. Again, that dilemma thing.

With the market continuing to make short-term-to-not-so-short-term new highs, more and more sectors are following suit. So obviously, conditions are improving.

Not much has changed from yesterday’s newsletter though: I wouldn’t get too excited just yet. There are plenty of sectors that still look like they are in trouble. This is especially true in anything interest rate sensitive with Bonds remaining in a serious downtrend-which continued their implosion on Wednesday BTW.

Again, it’s a dangerous environment to be making a lot of decisions. Therefore, don’t make many. It’s times like these that I’m reminded of “Primum non nocere”-often known as the Doctors’ oath: First, do no harm. I could tell you to just dive right into the waters and of course the market will correct 10 seconds later. So, once again, it is okay to sit back and let things shake out. It took me many many years to learn that sometimes the best action is no action. If you’re new to this game, I just saved you a lot of time and money. You’re welcome! Honor your stops on existing positions. If you really really like a setup (long or short), then knock yourself out. Just make sure you wait for entries and of course, honor your stop(s) if triggered.

For the skilled and aggressive, watch for an OGRe (opening gap reversal) trade in the index shares. If you don’t know what that is, don’t try it at home. Get educated and watch them unfold for a few times. Read the articles on my website (they might be easier to find on my “new improved” website, Click here).

See you at the chart show!

Best of luck with your trading today!

Dave