After last week’s tumble, the market aimed to stage a comeback on Monday. Volume was lower across the board as Summer and Monday trading hold true to form. The news cycle continued to focus on the appalling situation over the weekend and turned away from North Korea. VIX fell on the session as stocks moved higher even after last week’s action. Friday’s put buying was even higher than Thursday’s session. SPY move on Monday erased all of Thursday’s losses holding an uptrend line, but how long will it last is anyone’s guess. We are still in a seasonally weak period for stocks and caution is certainly warranted here. Buying opportunities are not abundant, but some are there just not in the fashion we would normally see them. At this point, we will continue to proceed with caution with the expectation we are going to experience a lot of chop and slop until fall trading begins.
Obvious points of interest for us are Monday’s lows and Friday’s lows. A breach of those without a reversal back through would signal weakness. It is hard to say how this market will move next, but for now we are not in a sweet spot to have a huge rally. Expect anything and everything to happen as this market is not what it was in 2003. Trading has evolved with sophisticated trading models mixed in with traditional portfolio construction. ETFs have played a large role too. It does not mean the world is going to end, but what we do understand behavior will not quite be the same as it was. Principles of cutting losses and position sizes will never change, but the signals will adapt over time as new information pours in every second. Cut your losses and ride your winners is a great formula for success. The hard part is knowing when to exit and not overriding your system.
We will continue to power forward with our methodology. This site will continue to strive to be the best that we can for our members. Since 2007 we have been doing so. Our longevity is not due to some magic get rich scheme. Disciplined and relentless execution is why we are still here today. As long as markets exist to trade we will be here. It is that simple. Come join us.
