How I Know When To Be Bullish
On Tuesday, the Nasdaq opened soft but quickly found its
low and began to rally sharply. Although it slowed a bit by mid-day, it
essentially never really looked back. This action has it closing well, above its
recent highs, and at new highs for the year.
The S&P put in a similar performance.
I have been receiving some emails here and there asking me
why I am bullish (and also giving me quite convincing arguments on why I
shouldn’t be). I’m bullish because the market is going up. As a momentum
player, my job is to determine the path of least resistance. And when it’s
obvious, I slap a big blue arrow on the charts and trade in that direction.
Trading is not rocket science. Don’t get me wrong, I’m not saying it’s easy. My
point is that you don’t have to make it more difficult than it already is by trying to outsmartÂ
the market–believe in what you see and not in what you believe.Â
So what do we do? As mentioned on Monday, the
market “undercut” the last pullback but reversed. This, combined with
OSS and TRIN Reversal buy signals on the following day from an oversold
condition suggested that it had the potential to resume its uptrend. And,
it did. So far, the trend obviously remains up. However, we are getting overbought. This, in
and of itself, does not mean that it can’t go higher and you should start fighting the trend. It does
suggests that you might want to look to take some profits off the table and trail a
stop.Â
No setups tonight. We should see numerous setups on
the next pullback.
Trail ’em If You Got ’em
Williams Energy Partners
(
WEG |
Quote |
Chart |
News |
PowerRating), mentioned Monday night, began rallying out of a pullback on Tuesday.
When a stock moves in your favor like this, make sure you trail a stop
higher (a).
On Sailing And Markets
The race from Charleston, SC to Bermuda is supposed to
be a nice ride. The prevailing winds and seas are supposed to be at your
back. The breeze is supposed to be cool, but not cold. Given this, the
trip is supposed to be fairly quick and easy. Under such ideal
conditions, I assumed that I would get a lot of thinking done about life and the markets. I
assumed that when I returned, I’d have something astute and philosophical to say about
trading. And, you would all be impressed. Well, conditions were less than ideal.
The winds were strong and in our face. It was cold, wet, and the seas were
rough. At one point, we began taking on water. Needless to say, under these less
than ideal conditions, I was unable to come up with anything philosophical to
say. On second thought, maybe I do. We took what mother nature dealt us, acted
upon what was and not what was supposed to be and 133 hours, 55 minutes,
and 5 seconds later, we arrived in Bermuda. So, I guess in trading, like
sailing, you know what is supposed to happen but have to act upon what
actually does.Â
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on
every trade!
“….. ..I have read your book over a dozen times and I am still learning new things. Thanks for making me realize that I am a “method” man and I have since changed my ways increasing my success greatly….Thank you again for writing a terrific
book…..”
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