This market continues to run with an all-in or all-out mentality. We are seeing massive moves both up and down, which in the past, would take a few days to accomplish (point wise) happen in a few hours.
The market makers aren’t giving the retail traders any time to think and is putting them on “react mode”. The problem with traders being in a “reaction mode” they make trading decisions based on emotions. Anybody who has been in this business for more than a couple of years knows, any trade you make based on emotions, will be wrong 99% of the time.
The key to controlling your emotions in the stock market, is anticipating when a “change” in trend is set to hit. That is considered the “time factor”. But you also want to see price react to the expected reversal period. We have had a trend reversal time frame of 4/29-05/05 for over 3 weeks now. We are within that time period now.
Being we are in the “trend reversal turn time period” does that mean one should just jump short? No, what it means, you don’t want to be buying into this rally. Maybe start scaling out of long positions or tightening stops. Once price reacts to the negative pull, then you can take a short position. But the key here is to anticipate the turn, so you can always have control of your emotions.
We have already identified the potential low period and when I want to be scaling out of shorts and start looking long. For now, anticipating a change in trend to the downside is favored. Once price reacts, switch sides and start shorting. This move higher off the 04/01 lows is more mature than many think right now.
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