Historic Down Months Call For Patience

2021-09-15

As we’ve said before, September and October are historically rough months in the market.

And a time-tested strategy to navigate these choppy waters is setting up: have patience.

This week started off with the market heading lower and then teasing another positive day Wednesday. Anyone planning for another upside move through the end of the week should be cautious.

Getting impatient and embracing an overly positive outlook could be costly.

The daily back-and-forth in this volatile environment can test even veteran traders trying to wait for the best setups.

This is a time to avoid an itchy “click” finger on your trading platform.

A barrage of news and market updates can create strong FOMO — Fear Of Missing Out.

Keep in mind that “hot” news doesn’t always correlate to stock and price moves. Institutional influences — market makers, large funds — drive market movement.

This is what trips up so many traders who buy into the news assessments after institutional influences have made their moves.

We’ve been seeing this more often in recent sessions where market influencers drive up price and then bail out — what we call a “pump and dump.” Traders let emotions take control in the midst of the excitement and then get caught holding the bag.

Based on market history, any talk of this market heading for a sharp turnaround is likely a head fake.

Positive momentum may continue in the near term, but caution is warranted as the market shifts into October. Simpler Trading veterans have seen this cycle before and signs are building that it’s about time for markets to kick hard to the downside again.

This is a time where patience becomes a powerful position — waiting, watching with cash in hand.

Strong advice learned at Simpler Trading is that traders are not naturally gifted with patience.

We repeat this message over and over again at Simpler — unless you develop patience you will struggle in trading.