Patience – Wait For The Dumb Money

  • Post author:

As you will know from the webinars, we have been in the midst of dumb money activity and as a result are seeing tree shaking.

Stocks trading lower

Of course tree shaking can turn into further weakness so we should always be ready to change our position on the market if needed. You may recall we did that on Jan 4 2019 when we turned bullish having been bearish just the day before. And from that point we had a year long rally.

Knowing the levels of support and resistance is important for a quick check of where price is in comparison to these levels. Breaching these levels may be reason for further weakness.
It is best not to be taking too many trades at this moment. As you may have realised, other than AAPL, we have been standing aside and watching because of the noise level and dumb money activity increase.

Soon this might be changing but until then, sit back, relax and watch the dumb money clumsily fail to successfully negotiate this market. When they have had enough pain, we can start to show some interest by testing new positions or adding to existing ones.

Capital protection is not just about using tighter stops in case of a market fall, it is about knowing the market. You have heard me say that part of what makes a successful trader is knowing when to trade. If you read the daily reports each morning and watch each of the weekly webinars, you will have seen knowing when to trade fro the front row. In fact, go back to end of 2018 and the start of 2019 even and you will also have seen it in action then. Both times the market fell quite hard and screams of a bear market worse than 1929 could be heard in many different mediums. Be greedy when others are fearful is what you heard in this medium.

Trading is part science and part art. Most people don’t ever learn either aspect as they never step back to look at the big picture. Science can be learnt but the art aspect takes a lot of learning from experience over a lot of time.

As some of you have already mentioned, this recent period has been a good learning curve. And that should also be true for all of you irrespective if you have made money or lost money or even if you have not traded since the March lows.

If you have stood aside, you might be aware of some stocks that have had huge price increases but these are not the norm, so don’t lose sleep over the ‘one that got away’. If you weren’t in the market then be prepared to get into the market when price starts to display bullish reasoning. Read the daily Market Reports and watch the weekly webinars. Level 3 traders should read each post as you get a deeper insight and reasoning into most aspects of the market.

Do not be distracted by shiny pennies. Follow the rules, stay on the correct path, ignore the noise and trade what you see.

Let’s go trade!