Not a great start to the week, but we continue our sideways march with the market waiting on a catalyst. The Russell 2000 has consolidated right to its 50-day moving average with the Dow not too far behind along with the S&P 500. It is amazing to see this market not moving in either direction while the VIX continues to hang out near its lows. Bulls continue to be high in the AAII and II survey. Coming up this week we have some big tech earnings and it could certainly push the market one way or another. At this point we are going to continue to work our process by staying disciplined. People get in trouble when the stray away from their system and think they are smarter than the market.
There are certainly stocks looking quite good ahead of earnings. Earnings season always is a tough time for stocks as it is always a coin flip how the stock will react to earnings. If you do not have any cushion it is best to reduce your exposure ahead of earnings. Those with cushion and proper position sizing you can take on some risk heading into earnings. Know when your stocks are reporting arming you with this information will help your greatly reduce your risk to earnings.
Money management will be a huge key to your success. Most traders do not have a handle on how much risk they are taking with their stops and position sizes. Know where your exits are at all times and make sure you are not taking on a position size so big it takes a huge chunk of your capital away. You need capital to make money and the more capital you have the more you can make. Unless of course you simply want mediocre results.
Best of luck to your trading this week.
