by winston » Sun Apr 10, 2016 9:17 pm
MONDAY
Some volatility showed up, some distribution as well, all at resistance. With the overall large rounded market top of the past 16 months that suggests the rally is at least weakening.
It is testing the move, and sellers are taking something of a shot. Not a cutthroat selloff, but showing more gumption than they have had.
Holding the gains into earnings may not be that great of a near term technical maneuver. If there is disappointment, gains are dumped. If there is some selling this week ahead of results, a bit of cushion is there to rebound.
Indices at resistance after big runs. The Fed and central banks backing markets. Earnings that are expected to be lower. Some emboldened sellers but not nearly enough to break the market, just take down some sectors that enjoyed big rallies. Earnings season itself that is weeks long now.
The point: it may take awhile to get to the next real move. Even if there is some selling, that doesn't mean it is a new dive lower. That seems to be the either/or game that most are playing right now: new highs or new lows.
Often things are somewhere in between, but most of the time the market is not in the situation of a 5 year run based on stimulus, stimulus is ended, central banks are still acting as if they will act again, economic data worsening, corporate profits worsening . . you get the picture.
It is an inflection period given near resistance. Given the overall rounded market top. Given the indecision about how bad profits will be in Q1. Given Q1 GDP could be negative. Given the Fed and the world central banks and their agenda to keep stocks higher without new amounts of US stimulus if possible.
We plan on still looking at individual patterns that make sense where the Fed is and where the market is overall. We have some index plays in the opposite direction ready to go. We will move into positions as they show good moves but not whole bore; too much volatility, too many trigger happy people out there right now.
Be patient, don't feel the need to be as aggressive. Trade what you believe in, trade it well. If you have doubts or questions don't do it or get out of the trade.
Confidence is important and at times such as these if the volatility is wearing on you, don't do it. There WILL be much easier times to trade ahead. The KEY is to not just check out but to be ready when those times show up. That way you are ready to get on the bus at the bus stop, not those people chasing it.
Source: Investment House
It's all about "how much you made when you were right" & "how little you lost when you were wrong"