Patience is a Virtue

2018-05-04 | Allison Ostrander

Simpler Summary

Patience is a virtue. It is a phrase many of us have heard throughout our lives. It was told to us as kids when we asked “how much longer?” on a road trip. The saying was repeated to us as we grew older and checked for college acceptance letters, or when we waited for a call back from a job interview. A few may have learned this lesson and are now repeating it to their kids, but I know that for others hearing this phrase induces an eye roll.

If you are an eye roller, please rewind the eye roll and take to heart the phrase when it comes to trading. Impatience is another easy pitfall to run into when you start trading. Even as an experienced trader, you may feel the need to get your feet wet and jump into trades at the idea of growing your account. However, do not let your impatience be the only thing that is guiding you to take a trade. Do your charts show an entry point? Does the strategy and trade setup make sense for your Risk tolerance in your account? Do you already have on too many trades and feel over invested? Do you have a trading plan in place if the trade moves against you? These are some great questions to ask yourself whenever you are starting to feel impatience creep into your life. If you find yourself in conflict with some of these questions, then you may be acting a bit too impatient. Keep in mind it is okay to not be in a trade and hold for a better entry. Taking no trade has no Risk for a loss, and it is easy to take a loss when a trade is put on because of impatience.

Think of being a trader like being a fisherman. A fisherman has a hard time catching anything if he continues to reel in his line immediately after he casts it. A trader jumping in and out of trades without a plan, strategy, or entry can result with more losses. So if the impatient bug starts to creeps it way back towards you, put some Good Till Cancel or Stop Loss orders into your current positions, and then take a step away from the computer. Sometimes taking a walk, or just not sitting in front of the computer staring at your brokerage platform can squash the impatience bug and allow you to trade not off emotions, but off what you see on the charts.

Simpler Sentiment

David —  All of the action in the S&P 500 continues to suggest that the move down from January was counter trend and likely unfolding as an Elliott wave triangle.  And while it is possible that the triangle is already complete at Thursday’s low, one can’t rule out a move back below that level before the move up ends in earnest.  The move up we’ve seen at the end of this week is encouraging that it might be done, but a move back below 2615 would suggest that the move up hasn’t begun yet. If another visit to lower levels is required before resumption of an uptrend, the lows from the beginning of April will need to hold to keep the triangle view on track.

Bruce — After the 2 day rally, we are hitting some resistance levels.    We need to break through them in order to go higher and obviously not pull back too much, otherwise, we could once again retest some of the lower levels.   I am cautious and remain very light until I see more clarity on direction.

Carolyn — I’m still looking at mixed parameters in the SPX.  We’ve seen a beautiful rally from the triple price cluster of support that held in Thursday’s session, but we can’t expect the rally to continue unless we can clear this huge hurdle on the flip side.

That hurdle comes in at the 2664.02-2670.55 area.  That’s the first important area that needs to be cleared.  As far as the bigger picture is concerned, I also want to see SPX take out the 4/18 high that was made at time/price resistance.  Bottom line, the immediate trend is up, but we’re getting into resistance where this market could easily fail. RATCHET up stops on current longs!!

Henry — Friday gave us a little more two-sided trade, which is always welcome, and a good reminder to not panic at the lows. The S&P did trade through it’s 200 DMA average on Thursday, but the high reading from the put/call ratio tells us that if the majority of traders are panicking, we’re probably *not* going to see things fall apart. The market is very good about being an “equal opportunity dream destroyer” and if you can keep that in mind, it can make it a little easier to fade weakness and stick to your plan. I’ll also say that I tend to handle pullbacks better than being stuck in a short covering rally and the action we saw on Friday is a good example of why I approach the market in that way. Into next week we’ll have plenty of overhead resistance, but I’m looking for a little more strength back into major 21 EMA’s and then we’ll take it from there.

Danielle — This week, we have seen a lot of volatility. To me, every day, it felt like a ‘who is going to blink first’ situation, the bulls or the bears. I have been focusing primarily on earnings trades and intraday futures trades in light of the volatility. However, the daily charts of the NQ, YM and ES futures are finally showing me major RAF buys in conjunction with the squeeze – one of my favorite long setups. Who knows what will happen over the weekend, but I am betting next week, we trade higher. I am long ADBE, MSFT, INTC and HOME, with a cautious optimistic stance, looking for these squeezes to fire long and take the market with them. Resistance is always in the way, and these major charts have failed at overhead resistance every time they have rallied since the February correction. Will they fail at resistance again? Maybe. But I can at least trade it to the long side for now and watch decisions on the way up.

Danielle Gum says:

See the original setup HERE

Expert: Danielle Gum

Setup: Setup on AMTD

Update from Danielle: I closed my AMTD position when the S&Ps broke through the 200 SMA on the daily chart. We saw a lot of volatility this week, and there was a point where I thought the market would break with nowhere to go but down. I always need to protect my capital and being aggressively long when the market is falling apart, regardless of how much I like the chart, isn’t smart. I took a really small loss on this trade. I still love AMTD overall, but I want to see it recover the 50 SMA. The squeeze is still in play. If we do get the action I want in the market next week, AMTD will be at the top of my list to re-enter for a long.