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This morning’s price action serves as a pretty good lesson to traders who try catch every single market move, in terms of short-term tops and bottoms. In particular, when the market flashes signs that it is trending, it is usually correct to simply become neutral at junctures when the trend seems short-term exhausted, rather than fighting it via an outright bearish posture. Last week, it seemed as though we were largely consolidating through time rather than price, despite Friday’s gap lower. With the VIX spiking (especially TVIX), combined with financial publications and pundits turning bullish, many traders summoned their inner contrarian and felt inclined to call a top to the market. Instead, we gapped up this morning.
Even though some of the gap has been filled, there are overall plenty of charts that continue to act well and show no signs of topping out, such as ISRG and PCLN. True, issues like AAPL are too extended to buy here, but by and large this market has become more conducive to swing longs rather than swing trading shorts. Hence, my focus continue to be on scouring the long side for actionable ideas. A few names that I am long inside 12631 and working well today: FSYS JAZZ SAH.
