It is Friday, and that is just fine with me. Yesterday was a hard day. No, not in the market, in life. It was just one of those days where something unpleasant happens in the morning and you can never get the ship righted again. All day is like walking on the deck of a listing ship. Somehow, knowing that today ends the work week makes me feel better. Weird, I know, but fact nonetheless.
- Buy the dip and look to sell the position in the next few days or weeks, when the ultimate recovery/rebound occurs.
I recently read the above and, of course, I related to it. It is my manner of trading. I guess if one has to have a label, I am a swing trader. Swing traders buy the dip and sell the rip, holding on as long as necessary to get the job done. Sometimes, I will trade a trending stock over and over again, making profit on each and every cyclical turn, which is why I don’t understand the sentence below, which came in the article right after the sentence I just referenced above.
- Granted, such a strategy does not work worth a darn in a strongly trending market.
In fact, at least for me, swing trading works BEST in a strongly trending market. The reality is that all stocks are cyclical to some degree. No stock goes up without ever going down. Granted, many stocks have miniscule cycles, which makes them flat and hard to swing, but, as well, many have larger cycles which makes them ideal for swing trading, and I have found these stock shine most brightly in strongly trending markets.
- Remember, when the bulls get on a roll, such as they did in 2013, the trick is to jump onboard and enjoy the ride.
The fact is that I don’t trust a strongly trending market, such as the one in 2013. Because I follow the happenings in the world, I know that even a strongly trending market will fall back time and again (check out 2013), so getting on board for the ride is both an unnecessary risk and, often, a time waster. As well, individual stocks are subject to news and nonsense, just as the overall market is subject to news and nonsense, thus, even in a strongly trending market, individual stocks can swing wildly.
My point is, you can find stocks to swing trade in a strongly trending market, such as 2013, at least I did over and over again.
- In the late 1990s, the U.S. accounted for almost 20 percent of world imports. In 2013, U.S. goods imports were … just more than 12 percent of world imports – less than in the late 1990s.
The above is yet another marker of the transformation happening in the world. China is rapidly moving toward becoming the largest net importer of goods, and it is also replacing the US as the number one exporter to many countries, such as Germany. Now, on the surface, this appears to be bad news, right? I mean, the US is losing its supremacy to that upstart China, right?
Well, quite the opposite is reality. The US has long sought to reduce its domestic demand and increase exports and China is now on path to reduce exports and increase domestic consumption, i.e., imports. In fact, both are on track to becoming each other’s largest trading partner. Thus, the question becomes, what exactly does China want and what exactly can we export to them? My answer is broad, but it goes something like this – think technology, biotechnology, and advanced clean energy. Think pollution. Within this wide swath are small companies building on exporting products to China. Think fuel-cell technology.
- “Something everybody already knows isn’t worth knowing.”
I will leave you with the above, as it has meaning both in life and in the market. In life, the sentiment is dead wrong. Often, being the last to know is at, worst, dangerous, and, at best, embarrassing. In the market, the sentiment is exactly right. If everyone is already trading on “it,” it is too late. So what’s the point?
Trade in the day; Invest in your life …
