By: Scott Redler
As a market participant you MUST reflect on your trades to build on strengths and work on weaknesses. Today the market is opening at new months highs. How did you handle the action?
July 7th we had the Red Dog Reversal. The market took back the 1040 level and we saw the broken head and shoulders pattern.
1) Did you act quick and cover your shorts?
2) Did you get long quickly and position fast?
3) Or did you stay short and be stubborn?
July 13th we hit 1098, an 80 handle move from the 1010 low, a 60 handle move above the Red Dog Reversal.
1) Did you sell some longs into the big move? (Market was at downtrend and first attempts don’t usually work.
2) Did you chase and finally buy the excitement?
3) Or were you still short and stubborn!?
July 20th the market held the 50% retracement level proving demand for stocks and giving us the first higher low.
1) Did you have to sell longs that you bought chasing the market in the 1090 area?
2) Did you thank your lucky stars and cover shorts if you were fighting and rolling them up from the July 7th market reversal?
3) Were you in flat and targeting that pull-in area for a strategic buy as this was the technical spot to look at if you missed the first move?
July 21st Bernanke tested the patience of every technical bull and it got most traders out of their size. But didn’t violate the higher low.
1) Did you get out of your size, take a step back and stop trading?
2) Did you sell some longs but stay focused for the next opportunity?
July 22nd Europe had positive news and market ignited and put the downtrend in view to FINALLY GET BROKEN to the upside!
1) Did you say “they got me yesterday I’m not doing a thing”?
2) Did you lick some wounds and get back involved, buying 108.50-109.50 which was still buyable?
3) Friday July 23rd you had a full day to watch the market hang tough. Did you buy 109.50 for the Break of 110.09?
4) Or did you remain stubbornly short, thinking you were more powerful than the market that clearly wants to go up?
FAST FORWARD TO TODAY. We are now over the 200-day moving average, this is when stubborn shorts get capitulated. This is where some chasers come in and buy this market- and the trade becomes very tricky.
Sometimes Reflection is tough and painful, but it is Necessary for honest progress.
