Is Too Fast Bad For Traders?

2021-06-15

The overall economy appears to be rapidly picking up pace, but is it too fast for supply chains and the labor market — and traders?

The grind between growth and supporting the economy’s rally is creating uncertainty in the stock market. Uncertainty doesn’t sit well with people risking their capital.

A positive opening session this week was followed by a slip to the downside today as market nerves were rattled.

Underneath the uncertainty lies potentially more stable opportunities from underperforming tickers that have weathered the “chop and slop” of this volatile stock market.

These are bullish stocks — such as the tech sector — that are showing a reversal from downtrends and are poised to trade higher as the market pushes upward.

Stocks in a reversal move exhibit key signals — breaking above key moving averages (resistance), positive corporate news or events — that indicate a trade setup forming. These momentum indicators are triggers for traders seeking direction in an up-and-down market.

Traders who can ignore the emotion, headlines, and politics surrounding the market can follow and target these “stealthy” stocks. Stable underperformers poised to push to the upside are possibilities to consider when an otherwise uncertain market gives you pause.

The market has much to digest this week — including another Fed meeting — that might spook this tenuous momentum. Simpler’s traders are sticking with smaller time frames to avoid long-term exposure and waiting for solid signals for setups as they watch what transpires this week.

Uncertainty from fast economic growth coupled with sudden market moves keeps Simpler’s team focused on the plan to take new entries when distinct upside signals hold. Otherwise we’re content to limit risk and stay the course of waiting for the next opportunity.

We Saw: Market strained under weight of uncertainty —

  • Costs for production, supplies continue rising
  • Inflation keeps on ticking higher, broader
  • Trader hesitation with Fed meeting tomorrow

We’re Watching: Stealth stocks that trigger for an uptick —

  • Tech waking up after weeks of slumber?
  • Witching hour for options expirations
  • Key outlier setups