Not how you want to start the week, but we continue to see lackluster action from this market. Given we are heading into May seasonality turns negative despite what we have seen over the past few years. We have new longs performing well and we will continue to remain vigilant and taking advantage of whatever this market wants to give us. There is no need to play hero ball with this market.
The “sell in May and go away” crowd will certainly be out in full force trying to be the hero that had the right call. We are not going to sit here and claim we are going go one way or another. We have plenty of longs looking okay with some hedging positions. If we turn south we turn south and our stops trigger. Since we have proper position sizes and stops we can contain our losses.
The key is not only to contain losses, but also not missing out on gains. Missing big winners is almost as bad as letting losses run. Cutting losses is paramount, but the other side to the coin is maximizing gains. Proper position sizing and stop losses help us maintain a balance between cutting losses and capitalizing on gains. Most will have a hard time managing their risk and end up killing their account.
Where we go in May will depend on too many variables for us to decipher. Macro guys will be hemming and hawing over economic numbers or trade policy, but at the end of the day it boils down to price. Volume is important, but Price dominates. If we follow historical norms we are in for a difficult market until late September and October. No doubt there will be pockets to extract gains and we plan to be all over it. We hope you have a great week of trading! Good luck.
