3 Ways To Play This Trend… Or ‘Head Fake?’

2021-03-01

The stock market shot out of the gate to open March trading and didn’t retreat on the way to recouping losses from last week.

The Dow spiked to 31,535.51 points to gain 1.95% (adding 603.14 points on the day). The Nasdaq raced to 13,588.83 points for a 3.01% increase while the S&P 500 jumped 2.38% to 3,901.74 points.

The rally spurred celebratory fist pumps among traders while those more skeptical questioned whether this was a head-fake rally.

Simpler’s traders kept their monitors tuned to internal chart signals that weren’t exactly in line with maintaining a “trend setting” rally higher. The stability of today’s momentum is still in question.

Questions linger regarding consolidating momentum, bond yields rising, the dollar in flux, economic growth, and how and if the Fed steps in if inflation starts accelerating.

Simpler’s traders universally are focusing on three key steps to trading this market:

  • Smaller position sizing
  • Faster entries and exits
  • Conservative setups, execution

This hard and fast rally on the first day of the month is an example of the importance of having a “ready for anything” trading plan.

Simpler’s traders are leaning into the positive elements of the rally while keeping a sober approach to this market. A healthy dose of skepticism and caution can go a long way when working through the volatility.

Buckle up… there is more to come with this market.

We Saw: Market opens March with lion-like rally — 

  • Another vaccine hits the market
  • More politics railing against the wealthy
  • Big day across the board in indexes

We’re Watching: Positions, execution speed, caution —

  • Not getting drunk on rally juice
  • Internal signals that could show sustained rally
  • Setups in: NDX, GME, QQQ, GOOGL