Yesterday, I mentioned that the market was getting a bit tired and in many respects it is. There is a market rotation that is taking place, and that is normal, but it is something that happens towards the end of a bull market. In that context, this bull has been going for years now since 2009, and well into its 5th year. It most certainly can go higher, but I feel it is important to be aware of key spots on the chart that prices should stay above. In doing so, will allow the market to stretch itself out even further.
What I do see in the S&P is a clear path, but we have been moving sideways and that is not really a bad thing. It can be the next best thing other than a sharper correction. What is happening as I mentioned yesterday is a market rotation. Those with large gains are happy and content to take profits and re-invest in other stronger well established companies. It is a conservative way to stay in the game and not be left behind. Many money managers have a fear of getting out of the market to early and a way to justify being nearly fully invested is to reallocate the portfolio.
That is what is happening right now and as long as we stay above key numbers, all is well. I do think it is good to be aware of what is happening from a objective standpoint. Emotions can be a tricky thing in all time frames. It may be easier to handle the longer term challenges in that area, as apposed to the daily emotional challenges that can come into play with day trading.
One advantage from a totally different perspective is, if you never become married to a market direction, you are “Free” to exit at any time with your fast profit in hand. What the market does after that, you don’t really care. As day traders, we look to find small windows of opportunity that lend us a clear trading advantage or trading edge and then act on that. Once we exit, what happens after that, is of no consequence.
This again is a big benefit. You get a fresh new start on the next opportunity if one comes. If it doesn’t you can easily and calmly just let it go. Being selective is a quality that can be a big benefit to day traders. I can always do a better job I feel at this but I take what I see when I see it.
I have enough confidence to enter a trade knowing that I have a very good chance to come out on top if I do the things I know to do within my trading method.
I have gotten a little off topic, so let me go back to the daily S&P. If the market can stay above 1800 that is the first line in the sand. A break of that, will be very critical and could see some bigger consequences follow. That is not all that far away, but we are doing a good job of buying time and moving sideways.
If the S&P and the Dow for that matter can continue to hold on to the bulk of the ground recently gained and stay above 1800 in the S&P, we could see more from this market. Things can change very quickly, so it is good to be aware of what the trigger points are for a greater sell off. There is room in this market and as we get closer to the summer months, I could see things settle down a little and it is very possible we can move higher. I just don’t want it to be a far gone conclusion that it is going to happen. Since the bulls are in control right now, you have to give the benefit to them as no violation has been breached.
In looking at things objectively and without bias, I do see a clear path of S&P 500 to hit the 2000 mark. That is something that we could do and can see it in the charts. Just don’t think that it is for sure, is all I am saying.
This is the same as I mentioned before and commented yesterday. We can go higher as long as we don’t trigger certain levels. That is true today just as it was in December when I talked a great deal about it then.
Getting back to day trading, it is best when you have little attachment to a overall position or market direction, if you are just scalping trading for small moves. Things change very quickly and we need to not be married to any one idea, because that idea can easily change and unless you change with it, it could be your ruin based on the leverage.
You don’t want to force trades to live up to your trading ego. I think we have all done it, I know I have. Identifying our weaknesses as times can be very liberating if you are honest and willing to change. Is your trading ego the most important factor in being successful as a trader or is it the bottom line?
Make that choice today and be willing to let go of any unwanted positions that are holding you back from being all that you know you can be, and that is what I leave you with today. This is a choice. The choice to change or the choice to force your will on the market. You must decide!
The best trades to you all, Vince
Today’s trading in the NQ as I started a little earlier below;