the markets put in a volatile week, could there be a pullback coming?
Today we will be discussing the following topics:
What is the most recent Weekly Market Sentiment?
What might our Market Cycle Volatility Trend be telling us?
The question now becomes:Where might the markets go from here?
What are my Top Trading Tips, including the most recent and updated trading signals?
"Swim upstream. Go the other way. Ignore the conventional wisdom."
Sam Walton, Walmart Founder
Weekly Market Sentiment:
Bulls out pace the bears last week, as the markets continue higher, as price action ends up on a week over week basis.
The broad markets gain ground from its 3764.61 Monday open to a 3824.68 Friday close, for a large move 60.07 point increase on the week.
Market Cycle Volatility Trend:
As of January 4th
Yellow / Higher Volatility
When looking at the Market Cycle Volatility Trend above, the chart shows us when the financial markets turned recently to a yellow / higher volatility state this past Monday, January 4th when the market cycle volatility trend went from a prior green up trend condition to now a yellow, higher volatility relative to its past.
To summarize, we currently are in a more volatile market currently relative to its past, moving up twice as large a move this week from its prior week as of Fridays close.
What might this be telling us?
The question now becomes:
Where might the markets go from here?
After a Monday gap up, the markets sold off all day long on quite a larger than normal relative move with a lower close to start the week turning our market cycle timing indicator a solid yellow.
The markets then shot up for the next four consecutive days as the bulls were working to take advantage of the Monday sell off.
By Friday we were once again making all time highs.
Top Trading Tips
To trade in the markets, whether it be stocks or options, the goal is to always utilize prudent money management with a focus on the following top three trading tips:
what is the current broad market volatility trend - up, down, or transitioning
for the stocks to be considering putting on a position, to put the edge in your favor, you want to have both fundamentally and technically strong, with ample volume, and in an uptrend.
diversification across multiple positions with equal risk on each spreads out the risk where any one position might go against you
With these three objectives, no matter what the criteria to be using, it is important to note that there is never a trade that is a guarantee sure winner from the start.
This is why trade risk management, having a clear, simple, and easy to understand trading plan to follow, with ample diversification of trades give you the greatest edge for finding long term trading success in the options and stocks markets.