Like Location To Real Estate

Random Thoughts

Although with less vigor, the Ps (S&P 500) continued higher, gaining .18%. This is enough to keep them at all-time highs. So far, their recent breakout remains intact.

The Quack (Nasdaq) ended down slightly. I’m concerned about the drift here over the last few days. So far, it hasn’t kept up with the enthusiasm of the Ps.

The Rusty (IWM) remains the bigger concern. It has turned back down, losing nearly ½% on the day. Last week I poised the question: “Is the Rusty only rallying to kiss the 50 goodbye?” So far, that appears to be the case.

It seems like forever we’ve had a tail of two markets. The big cap issues, represented by the Ps remain strong on a relative basis and the smaller cap, more speculative issues, represented by the Quack and Rusty remain mostly weak.

The best bull markets are when everything is in gear. The rising tide lifts all boats, including yours.

Like location is to real estate, follow through, follow through, follow through is to trend trading.

So what do we do? Yes, the Ps are off to a good start but I’d sure like to see some meaningful follow through in the Quack and Rusty. The good news is that the database continues to say to wait for new setups. This keeps you from digging a deeper hole if things don’t pan out. Again: If we’re in the early phases of a new leg higher there will be plenty enough time to get on board. If things don’t pan out, then there will be opportunities on the short side. I know waiting is boring. I know that some of you have left to go off to find action. This is a bad thing. You have to stick with a methodology—any methodology—and learn the nuances. If there’s nothing to do—regardless of the methodology, then don’t go off and look for action. In the meantime, manage existing positions.

Futures are flat pre-market.

Best of luck with your trading (or waiting) today!

Dave