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Over the past few days, Mr. Market has adopted more personalities than Joaquin Phoenix after going off his meds. There are a couple of ways to view the increasingly violent price swings. First and foremost, remember that we are still in the midst of earnings season.
To me, trying to be a disciplined swing trader during earnings season is a lot like being invited to a party at Barney Frank’s house: It might be high profile with a lot of fun times to be had, but it’s just not my cup of tea. Beyond earnings season, the S&P has had an impressive run from 1040 up to 1189 today, and a 3-5% correction would be entirely reasonable and healthy within the context of a rally.
With all of that said, however, I want to remind you of how many serial top callers and underinvested bulls miss out the meat of virtually every bull run. There were a few days like today in that February-April run that we had this year, and they were not, in fact, the top. Instead, they proved to be excellent buying opportunities. Why, you ask, do so many people miss out on the majority of bull runs? The answer is because Mr. Market is a hater of epic proportions, even more so than other financial blogs who refuse to link to iBankCoin despite our heavy web traffic.
As I am writing this, I see that we continue to reverse hard off of this morning’s gap higher. We are back just below the support trendline, but I will look to see if there is more follow through before being too conclusory about whether this is “the top.”
Great post buddy!
Thanks, Goat.
Yes, great post! One thing I’ve learned from reading you guys at iBC is that I’m more likely to lose money than make money by trying to be early (ie top or bottom calling). Nothing wrong with getting on the train after it gets moving, because at that point, I at least know the direction it wants to head towards. I just shouldn’t wait too long to get on board, and although I don’t need to sit in an exit row, I should still know where the exits are!
You got it. Thank you.
top calling and bottom calling are generally suckers bets.
One thing you’ve already taught me Chess is to stay the course until it becomes certain that a new direction is established.
Thanks, pal!
Chess,
I’ve been reading your blogs the most out of the rest of the IBD bloggers for 6 months now and I think your’s is the best with the exception of Fly of course. Kidding. Anyways, if you own NFLX at $150 cost basis, what would you do right now? I am itching to add more after today’s huge gap but I don’t want to get too greedy. What would you do if you were in my shoes? I classify myself as a short to intermediate term swing trader like yourself as well.
My opinion: I would raise my stop higher to protect the nice gains that you have. I would not add to a position right here, right now. After earnings, I think this continues to be a great hold/short squeeze play.
Nicely done.
Thanks Chess