Bulls In ‘Glass Shop’ Face Expensive Missteps

2021-09-02

This market may not be a minefield, but it sure feels like the bulls are stepping cautiously through a glassware shop.

This year has sailed by to this point and once September is in the books trading will be a race to close out the year trying not to slip on a pile of broken glass trades.

The current trend has the market pulling back for a day and then snapping back to rally higher. The number of new record highs among the major three indexes this year is too many to count on all fingers and toes.

This recurring state of rip and rally seemingly defies the market matching with the world at large. The pandemic; lockdowns and possibilities of more ahead; foreign affairs crises; and politics run amok all point to serious negative reactions from the market.

Yet, this market rallies upward with little reaction to expected downside influences.

Simpler’s traders continue leaning into the bullish sentiment driving this market while tiptoeing through the aisles of glass trinkets. But they remain cautious bulls.

Cautious in Simpler’s book means sticking to a trading plan that takes trades with small risk on the downside while taking profits when available. This bears out a focus on more short-term plays while avoiding long-term setups.

There are a variety of stocks in key sectors (like Big Tech) that are worth pursuing in the short term while watching for flushes against long positions.

The next flush may not be followed by a one-day recovery. Something sharper and deeper could be ahead that catches traders leaning into this current drop and snap back trend. Cautious bulls are stepping lightly as something more meaningful and faster to the downside could be expected.

A holiday, three-day weekend is ahead, so Simpler’s traders are staying alert as September in the market gains momentum.

For the plan ahead, when in doubt — just don’t.

Be cautious out there because, like that glass shop, one wrong step in this market and traders are paying for more than they expected.

We Saw: Market rally higher ahead of Friday payroll data —

  • Uptick across the board in all three major indexes
  • Waning technology supply affects key sector — auto manufacturers
  • Debate over housing — bubble to burst or really a boom?

We’re Watching: How politics shakes out next round of borrow and spend stimulus —

  • Virgin Galactic grounded? What’s next for industry?
  • Resilience of this rip and rally market through September
  • Plays on payroll data details