We had a very shallow pullback today (open vs. close). There is nothing to be concerned about. Many people on Twitter may be saying we are setting up for a sell-off and they are short. Well, I wish the best of luck (no position) but all I NEED to know is what the market looks like, and whether or not it is set up to go lower. As I see it, the odds are NOT in the bears favor right now. We are abaove the MAs, and trading higher. We do not need to call tops, all we need to do is wait for a trade to set up – then take it. Simple as that.
Right now I do not think the market is exactly set up to power higher, and if it does happen to power higher tomorrow I do not expect it to be long-lived. Ideally we would see one more small contraction day, and then Friday potentially power higher (or at least trade higher). This is my thesis, and by no means will I continue to believe this if we sell off hard tomorrow BUT you must have a thesis and a IF, THEN scenario in your head so you know how to act upon it. Without a plan, you do not know what to do, and you are trying to work things out when you should really be acting.
That all said, I think we continue to do what we have been doing. Just following the trend, not putting on as many longs when we extended, and put some more on when we contact and show strength again. Do not worry about tops – if you happen to buy at a top (given you are not buying extensions) then that is an anomaly of the trend.
Be patient with your set ups. They will re appear, and when they do – jump on them.
Have a good evening. As always, feel free to contact me Twitter/StockTwits – @BenCBanks Email – Visit the contact page on this website.
My charts form this afternoon –