Sometimes Market, Traders ‘Need A Breather’

2020-11-25

That hissing sound during trading Wednesday was the air being let out of the record-setting rally just before the holiday.

The Dow closed at 29,872.47 points to fall .58% (dropping 173.77 points). The Nasdaq was the bright spot on the day, rising to 12,094.40 points for a mild .48 % gain. The S&P 500 was basically flat, pulling back .16% to 3,629.65 points.

The market has opened up trades requiring a few deep breaths followed by patience for those who want to test their mental mettle over the holiday break.

For traders wanting to wait for less risky moves, squeezes are forming in tickers across key sectors. Simpler’s traders are waiting for these to “tee up” before taking advantage of these buildups when they are ready to take off.

As we pass a turning point leading into the end of the year, we’ve been reviewing options for diversifying strategies and investments, adjusting plans, prepping for taxes, and renewing our mindset to tackle the next phase of this market adventure.

One reflection about trading that remains important is avoiding the news.

The business of news is designed to accentuate anxiety which stimulates an almost addictive response and desire for more news which leads to more anxiety. This is how they “sell” their advertisers’ wares in a never-ending cycle.

Traders caught in this cycle have a more difficult time viewing market action objectively — their mental mettle weakens. We’ll concentrate on avoiding the news and follow the technicals to close the year.

Much has happened up to this point in the year. And since the market let off some steam, we plan to enjoy the family, a good holiday meal, and as much down time as we can squeeze into the long weekend.

We hope you do the same, with best wishes.

We Saw: The market letting off some steam — 

  • Signs of promise in Nasdaq, key sectors
  • Dow pulling back from 30K record mark
  • Buzz of pandemic company buyouts

We’re Watching: What follows this breather on Friday —

  • Letting go of anxiety, focusing on fundamentals
  • Will Covid-19 vaccine boost the market through the New Year?
  • Setups that tee up from all the squeezes