Charting Path Through What Lies Ahead For Traders

2021-02-11

Somewhere between tantalizing and terrifying, this market continues to taunt traders.

Short periods of fast rallies are followed by gaps to the downside that seemingly herald a massive correction. Longs that are sudden short-sided losers transform into buying opportunities as the market rebounds and continues its bullish trend.

Is this market environment “normal?”

To new traders millions of them in the last year and a half the answer is, “no.”

They experienced the strongest market in decades when they entered the world of trading, followed by a pandemic catastrophe and market crash, followed by a strong rise into 2021. The trend enticed “easy” profits.

But the scary side of the market has been brewing for months, setting up the constant chop and fast moves that can devastate a trading account.

The “price patterns” can continue for some time and can be considered the historical “norm” where prices rise and then get flushed to eliminate gains and restart.

Simpler’s traders are keeping an eye on how the market appears to have priced in “good news” to this point and could be setting up for a potential significant flush later in the year. A weeks-long sell off could shake up the market no matter what is happening in the world.

This isn’t a “chicken little” expectation, because there’s no guarantee this will happen nothing ahead is certain in this market. Simpler’s traders remain focused on what works for them: strong trading plans, flexibility, managing risk, position sizing, strong charting signals, targeting momentum, directional bias, and not chasing the next “hottest” ticker.

New traders need to act quickly to reinforce their trading skills with tools and strategies while veteran traders need to… do the same.

Simpler’s traders actively daily use proven tools and strategies they have adapted to their personal trading style or have created solutions to weaknesses in indicators and pattern recognition methods.

The market ahead won’t be dull. The environment will likely lean toward the terrifying end of the scale for many traders.

Simpler’s answer to what lies ahead follows a tried and true plan to use the tools and strategies that carried us this far.

We Saw: Market continues historic up and down pattern — 

  • Nasdaq and S&P 500 up while Dow slips
  • Indexes flip today compared to yesterday’s close
  • Politics of economic stimulus still up in air

We’re Watching: Managing risk to personal comfort levels —

  • Number one job: cut bad trades
  • Strength of upside positioning
  • Setups in: DIS, SPY, ITB, NIO, LAZR