‘Mosh Pit’ Market Not For Faint Of Heart

2021-10-07

Simpler’s traders are working with some unconventional, yet time-tested strategies within their trading arsenal to handle sideways chop in the market.

This “directional limbo” is no time to get weak in the knees and start trying new things. We can’t say how the month of October — with no clear market pattern — is going to end.

We do know we need to focus on a steady trading plan in this ongoing “mosh pit” market.

Based on what the market is revealing, there are no expectations of calling this market a downward trend. Corporate earnings reports start rolling out in two weeks, which means Simpler’s traders will hold tight and ride the waves until then.

If earnings falter, we could see the market go to lower lows. With conversations still churning about Covid concerns and the debt ceiling, it’s not a bad time to be “sitting on our hands” while waiting to see how the market responds.

This environment is wild and haphazard with seemingly new pitfalls daily. There are repeated overnight lows followed by a rip, followed by a chop and rip with no trend in sight — almost absurd movements based on “normal” market action.

The focus is on catching good trades that offer potential for at least a small profit rather than having to dig ourselves out of a hole trying to hit a home run.

Diagonal trades to add some earning potential in the trading plan are an option while waiting to get a foothold in the market. While it may look as though it’s time to buy the dip, the patterns just aren’t strong based on indicators and technicals.

Following the indexes and searching for  ways to establish opportunistic trades while we wait to see who will break out — bulls or bears — seems a viable option in this market.

Until the market presents a more committed overall feel for a directional trend, Simpler’s traders are looking to pull potential gains from the chop by watching market levels and patterns for fast trades.

Keeping trades small and nimble is one way to hold steady and have potential for some positive results in this seesaw market.