During times of Volatility

If you did not sell before volatility kicked in simply hold and endure the whipsaws (harder than it sounds).

If you sold your position, be happy and sleep peacefully while the confidence of novices and new traders get shattered.

If you don't hold any position, look for opportunity to enter when the volatility subsides.

If you need to stay invested during times of volatility reduce your exposure and do not over trade.

More tips to deal with volatility

It pays to be cautious!

Markets have been on a tear since my last post on May 05.  Indexes have hit new highs repeatedly.  There were plenty of opportunities to make money in this market.  However, the recent new highs on the indexes have been on feeble breadth.  The advance/decline ratio I track is not providing the underlying support for this rally.  Not many stocks are leading the market higher.  The sentiment is at extreme bullish zone which doesn't bode well for the continuation of the rally.  Ofcourse, no one can predict when the rally would come to a halt.  It pays to be cautious rather than adventurous at this levels.  Keep the profit objective lower and cut your losses quickly to stay in the game.

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Do not fight the Fed and Do not fight the Trend!

It has been almost 2 months since my last post on the Market action.  In my last post on Feb'19, I warned folks to be cautious since the market looked like it was to undergo a correction.  However, it turned out to be a minor pull back of about 3% and the Market has marched higher and hit new highs since then.  There was another correction of about 4% that lasted a week from Apr'11.  The Market remains in an uptrend.  I continue to remain bullish only because I see many stocks  break out to new highs and hold their gains.  The corrections along the way seem to punish the extended stocks and reward stocks breaking out of their bases.  Fed pumping liquidity without any end in sight is the main reason for the Markets continuous march higher.  Do not fight the Fed and Do not fight the trend!

Slow grind comes to a halt

Distribution on the indexes today.  This is the first day in a long time a meaningful distribution has occurred in terms of breadth.  The Markets have been rallying in a grinding fashion on low breadth  since the beginning of the year.  The breadth numbers I track have been steadily approaching a correction zone.  Today the slow grind has come to a halt.  Now is the time to tighten stops or take profits if you have any.  While one day of distribution doesn't make a downtrend, it pays to be cautious!

Markets Grinding Higher

Markets are grinding higher and higher everyday.  Many small caps have broken out and are extended now.  The breadth numbers I track are not in the extreme zone yet despite the markets making higher highs every day.  It appears as though the market might correct anytime now.  But, let the price action determine the next course of action.  At this point, if you are holding any longs tighten your stops and do not let the profits evaporate.

Small caps leading the pack

Markets are digesting the big move since the breakout on Jan'03.  Small caps are clearly leading the pack.  We are now in a overbought zone and many small caps that have been rallying seem to take a breather.  But remember, overbought zone can remain overbought for a long time.  The Market action continues to be positive for the bulls esp. small caps.  Follow proper risk management while placing trades and cut your losers quickly.

Markets Roar and Soar!

Breadth Thrust

Markets roared and soared ahead on the news of fiscal cliff deal.  Each of the market indexes I track viz. DIA, SPY, IWM and QQQ all tacked huge gains of 2.44, 2.56%, 2.94% and 3.18% respectively.  The last two trading days in the indexes netted around 5% approx from the lows.  There is no arguing against this move since breadth also tracked high which we haven't seen in over a year.  Having said that, the markets now need to digest this big move over the last two days.  The logical and ideal course for this market is go sideways for a few days, digest the move and resume the uptrend.  Perhaps, in this phase the breakout of stocks have a more likelihood of following through given that there is a breadth thrust.  Let the price action dictate the next course of action.