Morning Market Thoughts
Good morning. We’re looking at a 40 point gain in the Dow 30 at the open. Always nice to see when you wake up — a bit like looking at your Fitbit or Jawbone readings and seeing that you slept really well last night and got plenty of both deep and REM sleep. You feel like it’s gonna be a pretty good day.Don’t forget that the S&P and other indexes are up at resistance. That’s where they have struggled many many times over the past year or so. Hopefully we will see a breakout and stocks will start another leg higher. There are a lot of reasons for investors to pull back and wait for more clarity — to wait and see whether the economy picks up, and whether corporate profits are good going into the remainder of the year. There are reasons to be somewhat reluctant to own stocks because you expect “the big one” and want to wait for it to happen so you can rush in and buy low.
Those are great reasons to stay sidelined — and they are certainly valid. No criticism from me. But I think the most compelling reason to have some tentativeness in making a big bet on the major averages right now is because they are at resistance. You see the positive action in the midcaps and smallcaps, and that’s encouraging. You see the market’s bullish reaction to negative news. Those are good things.
So there is evidence that the market is going to move higher…and you are ready. You are holding only stocks that are working (and many members have posted their holdings in the forum). You aren’t riding stocks down and incurring pain and losses. You are trading like a pro — staying “involved” by being very selective in your stocks. Demanding trends. But you are waiting for a technical reason to buy. Technical; not emotional.
When you are approaching the market in that way, the hardest part is just waiting. Because the market doesn’t care if you are bored or frustrated. It’s just going to do what it’s going to do, when it’s going to do it. And that can be tough for an objective trader to handle.
But that’s what you must do. Handle your emotions and instead pay attention to the market and remember that the market ALWAYS breaks out of trading ranges. Always! If it did not, there would be no such thing as trading ranges — instead, there would just be “the high and the low” of the market…which never changes.
Have a great day! See you in our forum.
Dan
Market Update