I hope you’re keeping well.
We had another dramatic week personally, with an emergency in the early hours of Thursday, but the upshot is everything is now fine, and a baby girl will be with us in the next 2-3 weeks.
I’m somewhat sleep-deprived but it was another very good trading performance week in the markets. The question on my mind though, is whether investors are deluded, is this a bull trap, or is everything rosy in the garden?
A few weeks ago I drew out the various scenarios that could play out. One was a repeat of the 2015 flash crash and another was the markets creeping back up to their 200-day moving averages.
It is the latter scenario that has prevailed, and now we’re in that vicinity, there will be yet more excellent trading opportunities.
Breaks of 200-dma’s followed by consolidations and a corroborating OVI have become one of my favourite setups over the last couple of years. There is so much to like about them.
Similarly, reversal setups at key levels (like a 200-dma) also present us with excellent opportunities.
So, one way or another we’re going to enjoy the next few weeks, but our mantra of “Trade What You See” will rule the day.
The challenge in a wildly fluctuating market is that amateurs think they can come in and sweep up easy profits. And with luck sometimes they can.
But that can have the dangerous effect of diverting some traders off their more considered course, and looking for quick gambles to keep up with the Jones’s.
You know that would be serious mistake, but with such large price swings abounding, it’s easy to get sucked into the hype and drift into a gambling mentality.
Please don’t do that! There is so much opportunity by sticking to our plans. You can’t be onto every trade out there, and we’ve already seen so many of our favoured setups that have yielded exceptional gains … SAFELY!
In today’s OVI Market Review I focus on our main setups plus a simple filter for pullback reversals to the 50-dma.
There are still plenty of companies yet to report earnings, and there are even more stocks getting ready to form post-earnings setups … some around their 200-dmas, so there’s a lot to look forward to.
As mentioned last week though, please make sure your P1 (1st profit target level) is not too ambitious.
Again, look after yourself and your loved ones.