The party finally ended on Wednesday/Thursday, but Friday did see a recovery fueled either by short-covering or bargain hunting.
The result of a steep pullback is that you’re likely to be stopped out of profitable positions, or you’re facing a drawdown or loss on positions that haven’t yet reached P1.
But what you’ll certainly observe is that most of the worst affected stocks didn’t actually form the consolidation let alone the breakout from a consolidation that is an absolute requirement for most of our style of trading.
So for those stocks that would have produced a loss this past week, the vast majority should not have been in your portfolio in the first place.
My own thoughts are that this current blip is most likely to be short term, but as ever, I’ll only “trade what I see”.
In today’s OVI Market Review you’ll see a number of stocks that could be just one day away from being viable pullback reversal consolidations.
You’ll also see a number of stocks that did not form our required setups before capitulating.
If you use my setups AND trading plan, days like Wednesday/Thursday will only be uncomfortable rather than devastating.