Flattening The Dead Horse On Follow Through
By Dave Landry | Random Thoughts
Random Thoughts
Housekeeping: You might have noticed that DaveLandry.com is crazy fast now. I had the servers updated to private Linux servers overnight. Unfortunately, progress doesn’t always come without pain. Emails seem to be caught somewhere between the old server and the new. If you emailed me within the last 48 hours and haven’t heard back your email might be somewhere in between. I hope to have this issue resolved shortly. Thanks for your patience.
Yesterday, I posed the question “Is this the one day?” The one (or two) big up days when a market is near new highs that makes all the difference in the world. The one day that puts the market back to new highs.
Well, we got the “one day” but we didn’t get the “two day” yesterday.
Thursday was a shoulder shrug. After the mother-of-all up days, the P’s and Quack ended flat and down 1/3% respectively.
The Rusty was more than flat. It lost ¾%. This action is disappointing. It suggests, so far, that the rally is mostly a big cap affair.
As I preach (here it comes) follow through is key.
It’s not the end of the world, sometimes markets have a massive up day, a pause day, then they follow through to the upside.
As trend followers we have to resist the temptation of predicting too much. We know that all predictions are about the future and a lot of “stuff” can happen between now and then.
Until the market follows through, we need to look at where the market is and where the market was. Even with the big up day, the market is still where it nearly a month ago.
Begin beating dead horse—again, follow through is key—end beating dead horse (well, you can’t beat a dead horse but you can flatten it).
So what do we do? Even though we did have THE “one day” the market still remains mostly sideways as of late. Internally, things are mixed. A few areas made new highs, some made new lows, and many are mostly sideways. As a pullback player looking for trend followed by pullback, this action is not creating many new meaningful setups. This is probably a good thing. It’s the database saying that you might want to let things shake out a bit before establishing new positions. Patience in this business is key.
No columns/newsletters on Monday (12/23/13) and Tuesday (12/24/13).
Merry Christmas to those who celebrate.
Futures are flat pre-market (I’m publishing a little early today).
Best of luck with your trading today!
Dave