Search For Path Of Least Risk, Resistance


Simpler Trading Team

3 min read

Despite all the bad news in the world and dire predictions from the financial media pundits, stocks and the market are enjoying an overall strong year.

Through almost three quarters this year, the S&P 500 is dancing at record highs, the Dow is showing considerable resilience, and the Nasdaq seems to gain ground with each Big Tech accomplishment.

Strong and determined rallies to this point don’t appear ready to give way to historically bearish months for August and September. If this environment holds, traders could be running with the bull market into next year.

Green or long in the tooth, traders need to keep adjusting their planning and updating skills because this market has shown a tendency to suddenly change and send all plans into disarray.

So how do traders navigate a volatile market that appears to be in a perpetual state of rip and rally?

Simpler’s traders search for signals that stand out to determine market shifts and are focusing on shorter time frames. The next signal for a strong play could happen in minutes and be missed for those who aren’t prepared.

No matter the “attitude” of the market or the chart signals or time frames, Simpler’s traders work to identify the path of least risk and resistance.

If the market is bullish across a particular time frame, traders want to determine if a possible setup fits an established risk plan. Then, what’s the path to profit?

When the market shifts, Simpler’s traders let it lead and find the path of least resistance to time their next entry or exit.

This “give and take” to let the market lead requires a trading plan that can adapt in a volatile market.

Last week expectations were the market was setting up to follow record-setting gains with a sharp pull back this week.

Expectations were challenged after the Fed meeting (no immediate plans to tinker with tapering or interest rates) and the market’s relentless insulation against negative news (Middle East turmoil and the ongoing pandemic).

If the market is shifting too much for comfort, a strong trading plan helps bide time while searching for trades, taking any gains available, and stepping back a bit to watch for more opportunities.

We Saw: Market opens week mixed, but holding strong –

  • S&P 500, Nasdaq hitting new highs as end of month arrives
  • Big players in market expecting inflation to continue higher
  • Pandemic darling stocks struggling into fall months

We’re Watching: World and weather affecting prices at pump –

  • Market reaction as U.S. closes out Afghanistan withdrawal
  • Homebuilders appear caught in rubber band scenario
  • For hidden ‘Fed-resistant’ tickers with momentum