The market will never come close to loving you as much as you want to embrace the beauty of stocks appreciating in value over time, so there is no sense in getting too emotionally-attached to them. Much like a prison guard for death row inmates, you must always remember that at any moment Mr. Market is capable of shanking you out of nowhere, even when you have done everything you are supposed to do. Hindsight vision is 20/20, so it is always easy to look back at prior bull runs and say,”Yeah, I should have been levered-up, 200% long the whole time. Next time I see a bull run, that is what I will do.” In reality, though, managing risk is an omnipresent aspect for successful trading over the long run.
We have the transportation and solar stocks leading us higher today, while the overwhelming majority of the rest of the market is coming in. This is not a vicious sell-off by any means, but it is enough to squash most breakout plays. Even though the broader picture of the market has notably improved over the past few weeks and even months, I am not in a rush to take on any new longs. Pullback are opportunities to gauge the underlying health of a security. What you are looking to see is benign selling volume coupled with strong hands once again arriving to step in and provide a floor.
Stocks are not providing much entertainment value today, as swing traders are probably growing restless and may even be putting on trades out of sheer boredom/frustration. On days like today, I like to survey the landscape and focus on whether selling volume is picking up and whether sentiment is quick to turn bearish on the first hint of a pullback. My sense is that we have the makings for a “wall of worry” bullish advance, but price action is the ultimate “tell.” Thus, I am looking for those strong hands to show up again in the coming days.
Well said!
that picture tells it all..way cool by the way