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How to play the game

Blog - How to play the game


The Current Market - Where to Look

The Current Market - Where to Look

25 Charts for your consideration

2 Weeks ago I sent an article out with the caption “5 Charts Showing Strength” and there was a very sound and logical reason for this, that many of you won’t have considered. (4 of the 5 stocks have advanced by the way)

Although, I’m very much on the record with my defensive stance (and rightly so), I think it’s important that those who follow my work closely should be aware of when I get defensive, it’s not just about making lots of money in a Trending Market… if you don’t know when to get defensive ahead of time, sometimes it can come back and bite you in the ass, and although I do accept I’m a little more cautious than most, most of you won’t know, but I actually consider discipline and structure to be my “edge”… of which everyone needs to find their own edge.

The problem (as a Trend Trader), is at the moment, there simply is NO Trend in play in the major Markets, therefore if you ARE choosing to enter the markets, the 1 thing you absolutely need to do is identify the strength within the areas of which you’re choosing to play.

The sand pit is vast, and to find the buried treasure, you’ll perhaps need to look a little deeper, because stocks like Apple, Boeing etc just aren’t cutting it, and if you’re someone that keeps going back to the same stocks time and time again, it’s a little tougher for you, because there is clearly stocks moving in other areas.

Many of you look for the “quick” profits and the immediate move into the Green, but good traders understand it can take a few days (or indeed a week or 2) before the stock warms up… but if you have an understanding that you’ve identified strength, and you understand key support levels, it’s actually pretty easy to get on with your life and manage the trade… this is par for the course for any trader aspiring to garner discipline.

And if your well placed top loss is triggered… you limit losses and you move on… this is the game we play… it’s about keeping losses small, and maximizing profits, and although this seems easy in theory, the actual practice is relatively straight forward, you just need to know where to look.

Lets look at the Dow for a second

Dow 6th June 2019.png

This ladies and gentlemen is a sideways mess.

Can we get in there and predict reversals, and perhaps look to short the market (something I was actually hopeful of doing last week when support levels broke), and it was why my recent Analysis had a bearish stance… by Tuesday… things had changed… news driven events drove the market higher, and I reconsidered my thesis… which I’m happy to do.

What we’re seeing at the moment is a very news driven market, with incredibly clear resistance in the Dow (the most important index on the planet)… and in order to profit the market, it requires a very short term swing trade style, or a day trading style… both of which offer (in my view) - massive inconsistency… HOWEVER, for those that ARE looking to allocate risk at the moment, there’s no harm in looking for strength in the market and finding solid companies who just keep ploughing along and making new highs.

Here are a few of the stocks my client community are profiting from at the moment (which is obviously different from taking NEW positions in the Market)

Exhibit A - Starbucks (SBUX)

Starbucks 6th June 2019.png

Exhibit B - Ameren Corp (AEE)

Ameren 6th June 2019.png

Exhibit C - ROKU (ROKU)

Roku 6th June 2019.png

Exhibit D - Kratos Defense & Security (KTOS)

Kratos Defense & Security 6th June 2019.png

Exhibit E - Shopify (SHOP)

Shopify 6th June 2019.png

Hopefully you can see the difference between the chart for the Dow and the charts that my group are currently profiting from… many of you are choosing to trade stocks that have charts that resemble the Dow / Tesla etc… and whilst I do respect all trading styles, the approach that works best is the path of least resistance.

I’m not for 1 second saying that the charts above are offering “optimal” entries at the moment, or even if the trends will continue, that’s very much up to the Market and the news driven events that we’re seeing at the moment with Chinese / Mexican Tariffs etc…. it’s a VERY risky environment to play in, we could see a melt down in the next 48hrs (just the way it is unfortunately) but IF you are choosing to trade, there’s no harm in identifying your strength.

Hopefully this has given you a little “food” for thought, and here are 20 further charts for consideration for next week also.

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