Daniel Bustamante | Coach
So we got a nice rally today across the board and the long positions I took I've all but sold. The way the markets are trading right now it makes it difficult to get into longer term trades and to be honest, why would you want to? Netflix alone was up +6% this morning and NVDA was up something like 8% or 9% the past two days.
The same CNBC talking heads that hated stocks last week suddenly love them today, but really, who cares, it's news and if you're blaming them because you couldn't extract any returns from this market the you've got a bigger problem.
Remember, get optimistic before the news, not the day it comes out. Good investors are ahead of the curve.
I posted a few stocks on my shopping list in a Sunday post along with some price charts and notes. Then I had someone send me a chart that looked like the one to the right. It gave me anxiety at first glance and I deleted it. Looking at this one right now is giving me anxiety again.
It took a few days, two to be exact, to consolidate on the lows and rally (I know, waiting more than 2 minutes for a trade to work is stressful!). But we did rally. The key was how you executed on the long trade ideas which is usually where most get it wrong. I talk about options a lot but I like futures and shares.
This week was one of those weeks where it made sense to buy Nasdaq futures with a wide stop, small exposure, and look for the rally.
For those of you buying equities dealing with the swings until we rally is something you'll just have to endure. That, or you can get in and take shorter-term trades, which I personally prefer.
I missed on a few other ideas but it happens. Square and Netflix did exactly what I discussed from Sundays blog.
So where do we go from here on the markets?
We're not out of the woods. People get excited on rally days and get nervous on sell-offs, for me, up/down It's all the same. But, for those of you who still want to try the buy and hold you need to clear some key areas on the major US indices.
Nasdaq: $7070-$7075 is a key resistance.
S&P500: $2720-$2760 is resistance.
I like reducing long exposure here. This is not the dip where you buy and hold for 3 months, it's a market where you buy and short sell in 1-5 day trading windows.
If after this month you feel like this from these markets, then you're not wrong. We all do.
I'll leave you all with this. Stop paying attention to the news and stop reading the news articles to generate your investment ideas. Look at a price chart, learn to read a price chart and then from there you can start generating better ideas. There's a right way to read them and there's a wrong way, period. From there comes overall portfolio risk management and idea structuring. I know many of you that don't do this full-time or even consider it try to reaffirm your investment ideas by reading news articles that support your thesis. Stop. The news is after the fact, not before it. So hopefully this wild month woke everyone up again as we did in January.