What You And I Have In Common With The World’s Best Trader…
Before I get to
the market today … brrr, it’s cold! As I
begin today’s column, we’re breaking century-old temperature records, it’s -35
wind chill (that’s Fahrenheit and by the ocean folks), schools are
cancelled, and I find myself unusually close to my vast monitor array in hopes
of staying warm. Yet if there’s ever a reason I chose to leave the comfy
confines of the executive corporate world several years ago, today reinforces
the decision in the context of a one-floor home commute and trading in my
sweats.
Unlike the weather, both major markets continued their hot streaks this week
with the S&P gaining 18 and the Nasdaq tacking on 32. Both markets have followed
through nicely on their early-week daily pullbacks, leaving traders now looking
to price vs. momentum kinks as next week progresses. While the markets are
overbought on a daily basis based on both raw momentum readings as well as price
vs. momentum divergences, remaining in our TUB (“trust until broken”) mode
continues to provide a strong wind at the longs’ back on both a swing and
intraday basis.
Intraday pace was stellar throughout the week, with the typical exception of
Friday’s options expiration chop. Long bias on pullbacks with lesser trend turn
confirmations continued to reward traders trading with the larger trend, with
the hourly charts as noted below often playing lead intraday guide.
In terms of anticipating a break in the recent upward momentum, we know that
trees don’t grow to the sky, and by this time next week, it’s likely that the
market will join either the Patriots’ near-record 13-game winning streak or
Payton Manning’s near-perfect playoff quarterback rating in breaking stride.
S&P 500
Nasdaq
Moving Avg
Legend: 15MA
Larger Timeframe 15MA
See https://www.donmillertrading.com
for Setups and Methodologies
Charts © 2003 Tradestation
Streaks
I was listening to the AFC Championship press conference today when Teddy
Bruschi of the Patriots was asked about the team’s current 13-game winning
streak — a streak that is simply unheard of in the current-day NFL where
so-called parity exists (of course, in my view parity is a term mostly used
by poor teams as an excuse, but that’s another story). His response was
that the team didn’t view their effort as a 13-game streak; rather they
approached this weekend’s business feeling they’d effectively executed thirteen
one-game streaks.
Teddy’s remarks reminded me of Bill Belichick’s response to a similar question
back in December, when a reporter asked, “At 13-2, isn’t there something that
you like?” His response: “I think as soon as you have that attitude, you are
going to be 13-3. You take that attitude at 3-0, you will be 3-1. As soon as
you think everything is great and you don’t need to do anything, you will drop
one.”
And so it is with trading. Having hit my share of glass ceilings in this
business after significant streaks or upon achieving a specific target, I can
attest that trading is best viewed one trade and day at a time, without regard
to past performance. Cliché? Far from it, for aside from the confidence that
winning brings — and don’t underestimate the role of confidence — yesterday’s
results mean nothing in term of future performance. For when the market
re-opens on Tuesday, you and I will share something in common with the world’s
best and worst trader, whoever they may be: We all start Tuesday with the
same blank sheet and unlimited potential
Good Trading and Have a Great
Weekend!