‘Dull’ Doesn’t Describe Rocky Market Phase

2021-09-08

There never seems to be a dull moment in this trading environment.

By any measure this market is overextended, yet presents a constant rip and rally that opportunistic traders continue to exploit.

Simpler’s team continues to wait and watch for squeezes across shorter time frames that reveal patterns for high-probability plays.

Despite down days — like today with all three major indexes slightly under the water — this market is a lot stronger than traders might expect. Yet, it remains overextended…

This has Simpler’s team watching for buy signals that fit key indicators within price ranges while ever cautious of a potentially sharp pullback. And if the flush is anything like last year near this time, the downturn could last for weeks.

September and October historically have a track record of making life rough for traders. This “danger zone” leading into the fourth quarter can be devastating to traders who keep “buying the dip” without realizing the market may continue bleeding to the downside into late October.

And, much like history, the market is expected to repeat itself after a solid reversion to the mean and then move higher into the end of the year.

Simpler’s traders are seeing buy signals in key technology tickers, but any trades taken follow an overly cautious plan. Position sizing remains important to limiting losses.

Working through this annual rocky phase, the team is keeping an eye on weekly time frames to validate any opportunity signals that pop up on the daily time frames.

Honey badger stocks that don’t care what the indexes are doing continue to be favorite targets in rocky phases like this market environment.