Debate Gets Hotter Over Market Fall Or Rise
Debate over the health and direction of this market appears to be escalating as the market teeters on the next rally higher or dropping off a cliff.
The debate is ever-present in the Simpler community, even among our team of traders.
Market action this week was filled with pullbacks and attempts to regain the rally status. Some quickly heralded an “end of the world” scenario ahead.
But is this just more of the market “being the market?”
A prevailing few, for the time being, is that recent pullbacks are by no means “historic” and haven’t created a significant downturn. The market, based on looking back over the last year, is currently struggling with no “end of world” drops.
This market environment maintains a tailwind fueled by trillions in Federal stimulus dollars that continue to flow into the economy. Pullbacks, slight or heavy, haven’t progressed to anything deeper, at least not yet.
The other side of sentiment toward the market within the Simpler community is that this market is poised, almost preparing, for a significant drop that could shock many traders. Will it be something historic like 1929 or 2008?
Simpler’s expectations as a whole are not for something so dramatic.
Charts have been consistently showing for some time how the market dips lower, hits support, and then bounces higher. This choppy pattern leaves open the strategy of buying the dip before the rally, albeit on a shorter time frame.
Simpler’s traders are operating on the shorter time frames for setups... focusing on hours, days and weeks vs. days, weeks, and months. Scalping plays to the short side on these shorter time frames is a strategy for those who have the skills.
As with any assessment of the market, this environment could change on a dime if there is a big plunge and charts take out lower levels. This could be accelerated at any time by some big event, domestically or across the world.
Simpler’s team continues to manage risk with cautious position sizing while maintaining cash availability to be ready to act on opportunities ahead.
We Saw: Choppy, up and down day across major indexes —
- SEC continues questioning stability of crypto
- Trouble in the HOOD as stock drops post IPO
- Some “experts” say stocks are not in a bubble
We’re Watching: Not rushing into anything in choppy market —
- Strength of direction from current market drops
- Maintaining course, managing risk
- Staying strong in cash to jump on opportunities