Monday’s session saw stocks continue the rally from last week. Technically we are in a confirmed market rally as Friday’s big gains came with volume. Will this new confirmed rally work? The answer to the question is anyone’s best guess. There aren’t a lot of stock setting up, but there are some we may be able to take advantage of if they set up proper buy signals. Let’s not forget this current move is a v-shaped move. Some consolidation here would go a long way to help increase the odds we see this rally continue higher. Our job is not to declare tops and bottoms. We are here to catch majority of a stocks trend regardless of time frame and controlling our risk. Let the market pundits bloviate about where the market is heading next. Yes, we are in a confirmed rally and we will proceed by controlling our open risk.
Sentiment has tipped to the bear side and while we were well above average with the AAII survey we certainly did not see extreme readings. II finally moved and saw bears above 30%, but not near any extreme. NAAIM showed exposures increase to equities and it too never saw an extreme reading. We cannot control where the market goes despite our egos. What we can do is remain disciplined with our approach through position sizing and cutting losses. If you are trading without knowing where your open risk is at any given point you need to stop trading and get a plan. Big Wave Trading can help. It is paramount in this market environment, really any risk is controlled!
AAPL continues its decline as investors continue to dump the stock. Whether it be the slowing economy with weak iPhone sales is fine, but really price was the first tell. Waiting on the reason why a stock moves is always too late. In addition, not obeying exit signals is another killer to your portfolio. Allowing losses to pile up is the kiss of death for any portfolio. Do not let losses pile up. Obey your trading plan no matter what. You are not smarter than the market!
We wish you a profitable trading week!
