The market had a huge up day on Tuesday, the gains were entirely erased yesterday, and this morning so far we have recovered half of yesterday’s losses. Some people are calling yesterday’s action a bull trap; I’m not a fan of making calls based on the action of one day.
The perma-bulls get excited every time the market is up multiple days in a row near highs and then quiet down when the market has a natural pullback. The perma-bears take every piece of information, data, Candlestick, etc., and spin like if it’s 2008 all over again.
The fact is, the SP500 has not been able to break these levels in 15 months, flat is the pain trade, a big churn and burn with most not having anything to show for it except losses. The market has a tendency to move higher over time, so you always have to give the benefit of the doubt to the bulls.
BV, BLX, ACW, SSTK, BTE, CTRP, CP, LGF, are the stocks on my watch list today.
The rules are simple;
- Only get involved if they go through yesterday’s high plus a few pennies.
- Based on the chart patterns, the stops are close and clear.
- Either the market will get you in or keep you out.
- I only play this list one way, LONG.
- Stocks move in momentum burst of 3-5 days (stockbee), you want to buy on the first day and start unloading on the way up and on days 3,4,5.
- You are going to be wrong half the time.
- Position size makes all the difference in the world.
- I work with a price stop and a time stop.
- Stocks in the short term move from 52-week lows, 52-week highs, all time highs, etc.
- Contraction leads to expansion, this happens at lows, highs, middle, etc.