Market Out Of Woods Or Entering Fire?

2021-03-10

A hint of how dangerous this market might be for traders revealed itself today.

All eyes were on a continued rally higher across the indexes when into the close the Nasdaq pulled back.

The Nasdaq dropped to 13,068.83 points for a .04% slide. The Dow closed at 32,297.02 points to gain 1.46% (adding 464.28  points on the day) while the S&P 500 added .60% to 3,898.81 points.

The retreating Nasdaq — which relies heavily on Big Tech — showed why Simpler’s traders are leaning into the bullish nature while keeping an eye on the potential for this rally to burn up.

This mixed market is choppy, uncertain and not a solid environment for traditional trading. Trying to decipher all the action can be frustrating, even overwhelming.

Our traders realize the difficulties and continue to focus on chart patterns, shorter time frames, and risk-averse position sizing while staying attentive.

Traders are wise to stick to what works for their trading plan without trying to “force” any moves onto this market. This can help traders be aware of what movement could happen and be prepared for an opportunity.

While looking for opportunities to make money, keep in mind Simpler’s first priority of protecting what is in hand, i.e account capital. There remains the possibility of a significant gap down before the rally settles in for a longer run.

Focusing on consistent weekly gains helps define a trading plan with the goal of producing annual gains while being patient and not taking a “big swing and a miss” one time too many.

Simpler’s traders will continue on a path of strong convictions loosely held while being ready to go.

We Saw: Mixed results across the board — 

  • Economic stimulus bill set to “save” economy
  • Indexes moving fast, setting up frantic end of week
  • Dow jumps, Nasdaq slips, S&P 500 positively flat

We’re Watching: Hints of a sharp pull back ahead —

  • Being overly cautious and missing fast moves
  • Being impatient and taking hit to capital
  • Setups that make sense