Last week fell right in-line with this market’s overall trend. We continue to see tight trading action with positive reactions to earnings (for the most part). Bulls are elevated, but the overall trend is strong and that is all that matters to us. We keep harping on the need to follow the trend and to remain focused on your strategy. Deviating from our strategy would have yielded us weaker gains and removed potential for monster gains. There are plenty of reasons to jump off the bandwagon. However, price has yet to give a reason to push us off this current trend. When it does we will certainly work our signals, and exit the long side of the market. Until this happens we will remain with the trend.
AAII survey showed bulls jumped to their highest level of the year at 45%. Bears came in just a shade under 30% at 28%. Neither are at extremes, but those who were neutral were below 30%. All year long the neutral camp dominated the AAII survey and now we are seeing those who respond to the AAII survey pick a side. Will we get to an extreme is anyone’s best guess, but like rats fleeing the ship any blip in selling we will likely see bulls jump ship.
The most important piece of information here is to keep your losses small and ride winners. It is easy to say hard to do. Money management is very important and keeping proper position sizes and exits are paramount. We want to maximize our opportunity for gains yet minimize our drawdowns. It is not easy, and emotions will get the best of those who cannot control them. Follow Big Wave Trading and let us help guide you through this market. We have the experience and our process remains strong.
We hope you have a great week of trading.
