The Pressure’s Off

Random Thoughts

On Thursday, it sure looked like the market was going to just snap right back to new highs. This action would have shaken out the eager shorts, kept the buy and hope crowd happy, and it would have likely attracted even more players. Unfortunately, things didn’t pan out so well on Friday. The Ps (S&P 500) lost over ¾%. The Quack (Nasdaq) lost over 1/2%. And, the Rusty (IWM) lost nearly 1%.

This is why I preach taking things one-day-at-a-time. As Lincoln said: “The great thing about the future is that it comes at you one day at a time.” Markets are no different. You don’t have to predict out weeks, months, or even years. You just have to pay attention to what’s happening and follow along.

The lack of forward progress on Friday is a bummer. It keeps the indices stuck in a sideways range. On a “net net” basis, the Ps and Quack haven’t made any forward progress in 2 months. And, if you back the chart way out on the Rusty, you’ll see that it hasn’t made any forward progress in a year.

When the market is at high levels, a big up day will look like it’s off to the races. Unfortunately, a big down day will look ominous. Therefore, let things unfold and don’t get too caught up in the day-to-day action.

As I preach, the best thing to do is to listen to the database. Other than the Gold & Silver stocks, I’m not seeing a whole lot of setups just yet. Therefore, I’m going to look to nibble there and only there and focus mostly on managing existing positions. You know the routine, that means honoring protective stops and trailing them higher/taking partial profits as offered.

So what do we do? The pressure’s off. You don’t have to figure out the market’s direction. Let the portfolio ebb & flow help to keep you on the right side—or even out of the market. Stops will prune your portfolio and waiting for entries will often keep you out of trouble on a lack of follow through.

Best of luck with your trading today!

Dave