The headline of this story reminds me of one of my favorite songs by Chicago “Does anybody really know what time it is.” The next verse to the song goes, “does anybody really care.”
Does anybody really know where the top is, does anybody really care. Each new high is getting greeted with less and less enthusiasm. Traders have become accustomed to seeing new highs. So why should it be a surprise when we see the Dow making new highs?
The surprise will only come when it doesn’t make new highs and actually goes into some type of correction. When will that happen? I have absolutely no idea —and as the song goes, I really don’t care. There is too much money to be made trading both ways and making a quick 3%-4%, by simply trading against the “herd.”
Trading Plan
Pay attention to a shorter time frame and stop worrying about whether or not we made a top or not. I like to think about that statement like this. If I can get into four trades both long and short and make 3% on each trade, IWM is what I trade (iShares Russell 2000 Index-ETF) would have to move up or down 12% to equal the four 3% trades.
Bottom Line
As you may know, a move of 12% in one direction comes with big counter trend moves along the way. So being able to hold out for that full 12% will come with a lot of stress as well. Of course, there will be times when we see a straight up/down move that yields 12% with little stress. But I think that time is behind us and trading the 3% moves is a lot easier.
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