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To Have and to Hold?...or to Fold?

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Halloween commercials before Labor Day? Is it Pumpkin Spice season already ? Sure, it’s been unbearably hot, but are we really so eager to send summer on its way? What a terrifying idea.  With all of the scares being stirred up of late, it stands to reason that Federal Reserve Chairman Jerome Powell would further spook a market that had already been on a two-week slide after a two-month rally, with his hawkish comments from Jackson Hole last Monday, that further interest rate hikes are likely for the foreseeable future. As soon as Powell spoke, a market that had been enjoying a fine premarket rally went into a tailspin. By Tuesday morning, the sell-off turned even more severe but if it proved anything it was that the plunge before the unofficial end of summer was just gaining steam. By the time the calendar flipped to September on Thursday, the SPY ETF, which tracks the S&P 500 index, fell to 390.04, before staging a rally up to 396.78 right before the close, a far cry from th...
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What Does the Market REALLY intend to do?

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Remember the angst-ridden bad old days of teenage crushes? I certainly do, and I'm sure glad they're long over for me. But with three kids ages 13, 9, and 6, I have a feeling I'll be getting reacquainted with those days real soon.  When it came down to a crush, provided the object of your obsession was at least cordial to you, the question then became "Sure, she (or he) likes you...but does she like you like you?"  Attempts at analyzing your crush's behavior towards you- and others -for an answer to this question would often result in unconquerable insecurity and false senses of either elation or despair that could be set off by the slightest perception of a half-smile or half-frown. Since the stock market bottomed out for the year in mid-June, a lot of traders have been crushing pretty hard on a steady rally that is presently two months old. Now we must decide whether we're really in a bull market, or if it's all just a bunch of bull. The fundamental...
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No Size Fits All: Some Different Ways Stocks Bottomed Before a Recent Market Rally

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It's natural to boil trading down to perceptions of personal intelligence, or lack thereof. Nail all of your trades and you're a genius. Watch them go horribly against you, and you're a dope, a fool, and an idiot all rolled into one. Such is the case, it's not uncommon to equate self-worth to trading performance and in fact, if you're not encouraged by your successful trades and bothered by your unsuccessful trades, then you probably don't care enough to invest yourself fully into trading to begin with.  While you shouldn't revel too deeply in your individual winners, you should allow yourself optimism and a sense of satisfaction when you've begun to prove to yourself that you understand the ways of consistently making money in the market. By the same token, you mustn't dwell on your losers and beat yourself up over them, at least to the point that you can't move on to the next trade without a clear head. But it's perfectly appropriate to be ...
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Risky Business

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Risk is fundamental to trading, unavoidable because it's necessary. However, not all risk is created equal. Generally speaking, trading involves two types of risk: appropriate risk ("good" risk) and needless risk ("bad" risk). Going first with the worst, needless risk occurs when you enter into a position at a suboptimal area so that your stop is either unclear, exposes you to more loss than is necessary, or, even worse, you don't have a stop in at all. Moving over to the best, appropriate risk is: a. Clearly defined b. Minimal Position size is also a key component of risk. Your trading volume (the number of shares per trade) should differ depending on each particular trade. Having too big a position on at any given time is reckless and can lead to needless losses, while having too small of a position can prevent suitable profitability. But figuring out the correct position size will allow you to strike an appropriate risk balance. In a business where risk c...
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One Small Step

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 Will a Fed-fueled rally following the most recent interest rate decision be the catalyst that sends our bedraggled stock market on a prolonged upward march?  With the market heading essentially straight down week over week for the last three months, that's like me asking if that one chip shot I somehow put in from 80 yards out actually means I'm a good golfer. A sustained market move in either direction takes time to prove before we can confidently claim that a move is underway. So while Tuesday's rally off historic lows to end the session, followed by Wednesday's strong advance after some initial post-Fed volatility might have been a sight for sore eyes, it by no means signifies a bull market in the making.  And, what about the overall economy? The Federal Reserve's .75 basis point raise on interest rates, the largest single rate hike in almost 30 years, means that it just got more expensive for lenders to borrow from each other, therefore making it more expensive...
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Spotting the Move

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The Dow jones Industrial Average ended the session on Friday, June 10th down a mind-numbing 880 points from the previous close and all other major indexes were similarly maligned. As such no one would blame you for lamenting if you were not among those lucky enough to have either covered positions or gotten short at the top. The great Yankees pitcher Lefty Gomez famously admitted "I'd rather be lucky than good"  back in the 1930s. But a trader would rather be good than lucky any day of the week because it's the talent and ability that we cultivate that allows us to identify the right trades to make in any situation. In the long run, ability always triumphs over chance or simply being in the right place at the right time. A vital component to developing the ability that leads to good trading is being able to both anticipate when the market is about to make a significant move and then find ways to trade with the market's direction. Friday's session long sell-off...
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Look Before You Leap

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Practically anything we do requires us to look before acting, Awareness of your surroundings in all instances can mean the difference between making a sound decision and a needlessly risky one. An NFL quarterback must not only read the defense before calling a play but must also know where his receivers and blockers are in order to properly execute. A mountain climber making a careful descent down a steep rock face needs to know precisely where each next step will be before taking it, or else risk catastrophe. We're taught at an early age to look both ways before crossing the street. And we most certainly cannot make a trade without first studying the chart in order to understand where the best point of entry exists, provided one exists at all. There are a variety of trading styles and therefore no single way of approaching a trade. However, one of the most reliable approaches involves buying support and selling resistance. As we've discussed previously and repeatedly, support ...
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