The SPY, and the general market, received some overdue selling today, and that’s a good thing.
A stock market that grinds higher, without a pause, is difficult to manage risk. A good trader can identify an uptrend, but there is a nagging voice inside, “You are buying into the top dummy…”
Most traders have that momentum clock that tells them price has gone too far. The correct play is to let the stock settle in for a few days. The challenge has been the one day pause. A “healthy” consolidation is 2-4 days.
Last Friday, October 30 is a great example. A day of selling stocks, good relative volume, and that’s it, we follow it up with more buying.
We have found the best way to handle this back-and-forth is to have clear reference points. It’s easier to trade with conviction when you know exactly what you are looking at and looking for.
This should be in your trading plan…
Stock Trading Recap 11-4-15 | Wednesday Video
End of Day S&P 500 Map 11.4.15
S&P 500 heat map shows market leaders catching their breath.
SPY End of Day Chart 11.4.15
Oil and gas strong profit taking. Keep them in your tracking journal for the next move higher.