Race With The Rally Or Hold Tight?


Simpler Trading Team

Aug 12th 2020  .  2 min read

The stock market grabbed its momentum back on Wednesday as it spiked toward new records.

The Dow rose to 27,976.84 points to expand 1.05% (adding 289.93 points on the day). The Nasdaq climbed to 11,012.234 points for a 2.13% increase while the S&P 500 popped 1.4% to 46.66 points.

The S&P was just a few points shy of  its all-time high and the Nasdaq closed within 100 points of its high set last week.

In this market, is it worth “taking a shot” at tickers racing higher?

Finding a conservative way to get long in this risky fray is warranted.

Simpler’s traders are cautious, staying mostly flat while realizing higher risks with the limited trades they’ve taken. Tomorrow could just as easily open with a gap down.

The most important thing you can do is protect what you have. To accomplish this, it’s just as simple as closing everything and going to cash. Get in the habit of cutting loose bad setups.

But for some reason this simple psychologically seems hard for many traders.

If trade positions are giving you a hard time, hoping-and-praying-and-trading is not a long-term solution.

Instead of worrying constantly about trades in a volatile market or even draining your account with unnecessary losses, consider sitting in cash for a few days and watch to see how the market winds shift.

This time of waiting, and we know it sounds like a broken record, is well-spent searching for stocks that tend to do their own thing no matter market direction. These “honey badgers” can offer steady momentum and a “normal” looking chart pattern.

Let’s see what tomorrow brings.

We Saw: market momentum sending tickers higher — 

  • All three indexes recovering from Tuesday downturn
  • Nasdaq, tech sector leading the way
  • S&P 500 dancing near all-time high

We’re Watching: for stabilized strength of direction —

  • For tech to hold a clear rally
  • Whether the overall bubble is too extended
  • Setups in: TSLA, AMAT, AAPL, AMZN, SPOT 

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