Is the market “tone deaf” and just not hearing warning signs and continuing to put in new highs when the participants should be being more cautious? Or, is it “right on pitch” and listening to the correct inputs?
You can make a case either way. I focus on trading the reality of the market and looking and listening “Beyond the Noise” at what the collective market participants are actually doing. And the current reality is that the major market indexes are putting in new highs and continuing up.
Because of that reality, I am still taking long positions (and am in profit) in many stocks. There are also some sectors and individual stocks where the current reality is bearish and I am short (and in profit) on a handful of these right now as well.
The key has always been, and continues to be, having a defined trading system and following it, regardless of the “noise.” Even more important is having a defined risk management system so that the impact of losing trades is minimized and that winning trades are proportionately much bigger. That formula has served me well and ensured consistent profits for many years now, regardless of market conditions.
Gold still looks bullish. The reality according to technical analysis is that Gold has put in a series of significant higher-highs and higher-lows starting in December of last year. That pattern is unbroken and has a high probability of continuing for the next several months.
Oil looks bearish. It was in a channel, going sideways in big, volatile swings, for several months. In early May, it broke out of the bottom of that channel. What we see now is a series of lower-lows and lower-highs, with the probability of more lows to come. This is despite the fact that OPEC, Russia and others have committed to extend their production cuts even further out. That is the current reality.
If you are in the US, I hope you are having a safe and relaxing Memorial Day weekend and have a moment to reflect on what has been done for what we have.
Take care and I’ll be back next week with the latest updates.
Follow Me Trades LLC
Work: (360) 464-1083