Happy holidays everyone! What else is there for me to say that has not been said 1000x already. This is a strong tape, almost all of my long positions are doing very well, I continue to receive an absolutely insane amount of actionable long signals, and this market is extremely overbought and is still in need of a serious pullback. To be honest, it would be absolutely wonderful if the market pulled back as we head into the Christmas holiday. One would think that volume should start to contract as the week plays out and if that is the case it is always best to pullback on lower volume. So if the market decides to oblige I definitely will not be too upset.
If that does occur, it appears that it will be a great chance to purge my portfolios of laggard positions and replace them will all of these strong patterns that continue to pop up in my scans every single day. Friday’s options expiration was sure to have an impact on my scans and it is no surprise that I have a ton of signals. While my instinct is to think that it is options related, the last four options expiration date’s signals have worked. I am going to continue to follow that trend and just obey my signals. If I am wrong, you know exactly what I am going to do. Cut my losses. I never second guess that. If I am right, I will just hold on to my winners until I get some type of profit taking signal.
I am long so many positions on an EOD basis that my time requirement to manage these positions continues to grow each and every day. This is a byproduct of an extremely overbought market and due to the fact that we continue to trend higher for 8 years without a 20%+ correction. This does not allow for extremely high quality EOD patterns to setup where I can go long 5 stocks at 20% of my account capital each. I am sure this situation will occur again in the future. But for now we continue to have a very V-shaped extreme up and down moving overall market that is going to continue to keep me spread out on an EOD basis in the short to intermediate term.
There are a handful of signals this weekend and the priority, once again, lies in the hedges. My hedge positions are the most important so if I have tight capital restrictions in my cash account in regards to being able to take full positions in all of the signals generated on Friday the hedges will get the capital first. This methodology has helped contain drawdowns in 2015 and 2016 as the extreme market movements are having a theme of getting me fully invested near the tops of the uptrends. This happened before Brexit and before the election. Here I am fully invested for the past week and it appears the market is ready to finally work off its overbought conditions.
Like I said, that is no big deal. Any sell off gives me a chance to rotate out of laggards and into new leaders. Right now, there is no short of leadership and if the market can start ebbing and flowing in a more calm and sustained manner it is possible it could be a very great 2017. We shall see. For now, I focus on the here and now, making sure my stops are exactly where I want them to be in every and all of my current long positions. Most of my holdings have solid gains and priority one is to make sure I lock in gains in every single position that I currently have gains in. If I can not do that, then leaving flat or with extremely tiny to small losses are the only other options. Big losses never have been, are not, and never will be allowed. Ever.
Have a great rest of your weekend. I will see you in the chat room during the pre-market on Monday and/or I will see you back here Monday evening. Happy holidays everyone. Trade green. Aloha.
