regarding the poll that i recently added regarding everyone’s preference towards market analysis vs. individual stock trade ideas, let me share this:  obviously, aligning one’s trades or investments with the direction (trend) of the market greatly improves the chances that those trades will be profitable.  with that being said, i will always include market analysis to a certain extent on this site.  i’ve also mentioned several times in the past that my own preference is to trade individual stocks or sector etf’s vs. the broad market, although i often do both at times.

what you will notice on this site over time is that the frequency and volume of trade ideas will ebb and flow based on various factors such as my market analysis; the ease, or lack thereof, of finding objective set-ups, etc..  for example, if you look at a chart (e.g.- the SPX/SPY) you will see that the market topped exactly one month ago today.  for those of you that have followed this site for a while, you have probably noticed that i was very actively posting new trade ideas, primarily short set-ups, for a few weeks leading up to and shortly after the market peaked on april 2nd.  since then, the frequency of new trade ideas has dropped off significantly but my posts covering the major indexes has increased quite a bit.  there are a few reasons for this:

  • before the market topped, there were clear signs that a pullback was imminent or highly probably at the very least.
  • before and shortly after the market peaked, it was much easier to find clear patterns offering objective entries with good risk to reward (R/R) ratios (the ratio of the expected return if the trade was successful vs. the loss if stopped out).
  • long set-ups, which have done extremely well since i started this site at the first of the year, suddenly started to experience an increased failure rate shortly after breaking out.
  • once the market topped and prices started moving lower, it became increasing more difficult to find new set-ups offering objective entries.
  • after some of my initial targets on the major indexes and key stocks like AAPL were hit, including up until right now, there is absolute no way that anyone can say with a high degree of certainty whether the market is just consolidating, in order to digest some of the big gains from the early december-early april rip, before building the energy to launch the next leg of the uptrend OR the market is in the process of putting in a more lasting top (remember: market tops and bottoms are usually a process, not an event).

hence the primary reason that i haven’t posted the usual amount of long or short set-ups is because i’m currently not seeing many attractive looking trade set-ups and although i have my suspicions as to which way the market will break from the consolidation range that we’ve traded inside of for the last month, i would prefer let the bulls and the bears duke it out here until a clear winner emerges before positioning more aggressively.  that will most likely occur when either the april 2nd highs are clearly taken out or support at the 4/10 & 4/23 double-bottom lows (SPY) is broken (dashed horizontal orange lines on this 60 min chart).  one of the most important attributes of a successful trader is knowing when to trade but more importantly, when not  to trade (or at least not aggressively).