Trading more nimbly

Hey Market Pilots,

Since the market sold off last week going into Labor Day, we are now in a different mode. The market is no longer in a trend, which means clean moves are more difficult to find, and good looking setups may not actually work the way they are supposed to. The market is below some important MA’s which means they could be resistant or at least obstacles for the price when trying to move over them. Now is the time to trade less, smaller, and more nibley. 

Yes, the SPY has bounced off its Daily 50 SMA, but now the Hourly 50 SMA is overhead and angled down. Factor in my best trading tool, the Moxie Indicator, which is significantly below zero, and we are potentially setup for a ‘sell the bounce’ situation.

In my trading world, I need price to be over and follow MA’s in order for the uptrend to sustain. If the market floats up from here, it will be running into a down-trending Hourly 50 SMA which is exactly what I don’t want for an up biased move. Therefore, I have been vocal to my subscribers that for now, this move up should be viewed as a bounce into resistance. If that is understood, then the trades we take will be within this framework and we will have reasonable expectations about the size and duration of the trade. We also won’t be surprised if the trade is difficult, choppy, or flat out doesn’t work.

Right now, I am trying to look at long plays, but I am not in a hurry and I won’t go forcing any of them. I may even just trade the indices themselves since they move a little slower and generally more predictably. Now is the time to lighten up, trade less, and let the market move around since there is no defined trend. We don’t always have to be in the market and oftentimes being out gives us the mental openness to act when the time really is right.

Over and Out,

Your Profit Pilot.


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