Morning Market Thoughts

by DAN Good morning. Futures are up a bit, with the S&P set to open about 7 handles higher. The higher open won’t really change the dynamic of the market though. Back on March 21st, the S&P sold off on heavy volume, breaking through the recent low 2,355. That’s the level that’s important to me. Currently, the S&P is trading between 2,320 and 2,355. So the impact of today’s higher open will be to put the S&P right in the middle of the range. And since April 11th, the S&P has been below the 50-day moving average.

Because of the above facts, I’m looking for a rebuilding phase that will take a while. Ideally, we’ll see the market trade in the current range for a month or so. That builds a more solid base from which this amazing bull market can start the next leg higher. And during that time, there will be plenty to do in order to keep your account growing.

I’ve said it before, but a sideways market isn’t bad news for those who have some skill and attentiveness. There are always stocks that are in solid uptrends, and there are always sectors that outperform. When the market is consolidating, there are fewer choices. We we all have the same access to information, but we don’t all act the same way. Some stick with stocks they are comfortable with, despite the fact that they are declining. Others break out of that rut and focus on what’s happening rather than what they wish was happening, or what they remember happening in the past. Institutions see the same things you see…and they’ve got to put money to work. So finding a high growth company that holds a bid when the market is declining will tell you something about that stock — it’s under accumulation. Those are the stock that we’ll continue to focus on. And with all the geopolitical risk out there, I suspect we’ll have some awesome opportunities in the coming weeks and months.

For the first time since I was in kindergarten and had to practice hiding under my desk just in case the Russians hit us with a nuclear bomb, there is talk about North Korea actually getting to a point where they can hit the U.S. I seriously doubt that this is a real danger, but just the fact that it is being discussed by anyone other than Alex Jones indicates that folks are wrapped a bit tight these days, and that should make for the type of volatility that rewards the disciplined, and penalizes the skittish.

I don’t know about you, but I’m having fun trading this market. And I’m having fun because I’m not mired in the past, dominated by memories. Nor am I fixated on the future, waiting for better times. Instead, I’m focusing on staying in the present — never believing much of anything that’s said in the media (both financial…and otherwise). I don’t think of it as “fake news” because that’s a waste of my time. Focus on that stuff and you’ll find yourself getting sucked in to issues that do nothing to improve your quality of life. Just focus on what’s happening in the market — in particular, how stocks REACT to news. Focus on that stuff, and you don’t have to figure out whether news is “fake” or whether it’s “real.” Instead, you focus on what actually makes you money.

Focus on the money, and most other things take care of themself. Think “Serenity Prayer.”

See you in the trading room!

–Dan

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