The Pause That Refreshes

Random Thoughts

It never ceases to amaze me that a market can be off to the races on one day and then have a shoulder shrug on the following day.

The Ps went straight up last Friday but on Monday they just sat there. They were able to tack on a smidge, and at these levels, that’s enough to keep them just shy of all-time highs.

As I preach, you should never take an index at face value. However, unless there are a plethora of internal clues suggesting otherwise, you also shouldn’t argue with a market that is at or very near all-time highs.

As I have been saying, there has been some internal weakness such as the recently mentioned debacle de jours. For the most part though, most sectors remain in uptrends and, like the market, many also remain at or near new highs.

With last Thursday’s shakeout/fakeout behind us (in the spirit of a Double Top Trend Knockout, email me if you need the pattern), I still think this we could be seeing new highs on the horizon. You know the routine though, continue to take things one-day-at-a-time. In markets, you often get a big up day, a pause day, then upside follow through. So, hopefully, Monday’s action was just the “pause that refreshes.”

Bonds continued to slide but with somewhat less vigor. They appear to be returning to the bottom of their trading range-near the August/September. Hopefully, they stay in this range. A Goldilocks environment with stable rates and stocks rising would be awesome.

So what do we do? Although the buy signal in the Q’s is still valid, to my surprise I’m still not seeing a whole lot of new meaningful setups. As I have been saying, this is probably a good thing. This could be the database telling us to continue to let things shake out a bit. Considering this focus mostly on the management of existing positions. As usual, honor your stops. As I’ve been discussing, stops can help to adjust your portfolio. If we continue higher, your shorts will stop out and all you’ll be left with is longs.

Futures are soft pre-market.

Best of luck with your trading today!

Dave