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Waiting is the hardest part

Hey Market Pilots,

There are a few times of the stock market year that are historically poor for taking trades whether it be long or short. These times tend to bookend summer as traders like to get out of the house or office and hit the summer outdoor activities or take the family on vacation.

I am sure we are all familiar with the old adage ‘sell in May and go away’ where the notion is that summer has arrived and the big money is now in the Hamptons. This could definitely have root in reality as volume does tend to dry up and stocks sell off for a few weeks. This year was right on cue as May 1st was a gap down day for the market. After that, price chopped around for easily half the month before getting in gear and making a strong run for the second half of May.

The only time of the year which is seasonally poor is August. This month is particularly interesting because a major double top formed right in the middle of August, causing the markets to basically come to a sudden halt. Which came first, the chicken or the egg? Is it just coincidence that the market hit an exceptionally good stopping point such as a double top right in the middle of a historically poor month? Sounds poetic to me.

And so that’s where we stand; waiting for clarity and action. Of course, there are some bright spots during the month like TSLA, but otherwise I have found no clear trades for a solid week. A good trader must recognize when the environment is not ideal and step aside or risk losing money with trades that just won’t work. I keep seeing a bunch of names that look ready but just won’t launch. Other names that are setting up but aren’t there yet. And many more that keep drifting down, reinforcing the fact that the market is not ripe for trading right now.

This is a good time to practice, study, and search for names that might be the first to go when a trend resumes. I have an idea of what I’m expecting from the market, and what my Moxie Indicator is trying to tell me, but I’m not glued to that idea. I’m always willing to admit my take on the market is wrong, but I need evidence and proof of that. Right now, I have nothing, and that is enough info for me to say that it is a good time for me to be in cash, waiting patiently for the right time to pounce. 

Over and Out,

Your Profit Pilot

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