Be prepared for this next big move…
There are times when the
market is interesting and it inspires me to write in-depth columns
about what I am seeing. There are times when the action becomes frantic at my
trading desk, and individual trades or opportunities inspire insights to write
about. There are times when the action of the market makes topics like risk
management, profit taking, entry techniques, etc. stand out as especially
important and worth a column or two. Then there are times like yesterday when I
think, “What the hell am I going to write about? This market is boring me to
death.â€
Remember those first seven days of January, when the market actually did
something? That was nice but since then — nothing. No big selloff. No uptrend.
Nothing. Just boring, sideways, chop. It’s enough to put you to sleep — which
is exactly what you shouldn’t do.
Trading ranges are perfect for lulling trend traders to sleep. Once enough of
them doze off — boom! A breakout occurs. The more people sleeping, the more
explosive the move. The movement then wakes up the sleepers who panic and jump
on the trend, therefore accelerating it. If the move is for real, everyone makes
money (alert traders make more). If it’s not then the alert traders can scratch
their trades while those that just woke up get burned.
Sideways are boring, but those that stay awake are typically rewarded.
So which way will the next big move be? I still believe down.
I still don’t like breadth.
I still don’t like the fact the Nasdaq continues to lag.
I still don’t like how breakouts are acting.
I still don’t like price and volume action.
I still don’t like the fact that we are long overdue for a correction.
I hate what the bond market is saying.
I am continuing to build a list of short candidates and I continue to trade with
great caution.
I am also looking forward to a little action so that I have something more to
write about.
Best of luck with your trading,
Rob
For those who may be looking to expand their
knowledge beyond just market timing, my
Hanna ETF Money Flow System utilizes the VIX in generating trading
signals for spread trades.
Rob Hanna is the principal of a money
management firm located in Massachusetts. He has spent the last several years
developing and refining methods for trading in stocks across multiple time
frames. He selects stocks using both fundamental and technical criteria, and
then trades them using technical analysis techniques.