New market highs, but wait

Hey Market Pilot,

I enjoy old phrases we use like “it’s darkest before dawn” or “it was in the last place you looked” due to their hidden obviousness. Of course, it’s in the last place you looked, why would you keep looking after you found it? I know that isn’t the heart of the phrase, but it makes me think of ways in which the market works and our psychology.

Here is a phrase to ponder: “a downtrend is always preceded by a high or a new high”. So when I hear about new highs in the market being obtained, I am happy, but also wary because what goes up must come down.

As a barometer of this market action, some of my biggest account gain days are then followed by one or more down days. So I have learned to take profits when my account is having an exceptionally good day since my account is also a reflection of the market and when prices go up really quickly, they don’t last.

Therefore when I see that the SPY has made a new all-time high, I am excited and happy for it and what it means to us as traders, but I also know to watch out or be patient for the right opportunity to strike. With the market showing strength, I am back in strong bull mode, but waiting for the right time since buying at new highs can be a risky proposition. 

I love new highs, and tickers can make new highs many days in a row, but a downtrend is always preceded by a high print.

Over and Out,

Your Profit Pilot.


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