Don't Let the Action Be Your Juice

For swing traders, holding stocks for more than a few moments or even sessions, this type of price action should drive home a key point in virtually all forms of speculation: Be it horse racing, sports betting, poker, etc.. And that point would be that there are certain times where it is correct to lay off the action. 

The notion of "having conviction" and making big, bold calls ought to be reserved for special situations in speculation. However, in this day and age of 24/7 fast-paced news coverage and social media braggadocio, it seems as though there is an hourly contest to see which market pundit and players can make the next big call.

In reality, we simply want to stick to the basics: Objective broad market analysis as a supplement to individual price action in leading issues and potential new leaders, such as TWLO. And if the broad market is flashing warning signs, as it is now with the likes of Facebook and even Boeing wobbly, it need not mean a major market top is imminent but it almost assuredly means the market needs some time to sort through this mess. 

And you can be sure that during this sorting out process many a trader will be chopped to smithereens. To be sure, we are traders, and traders trade, which means we can and ought to take some shots here and there even in choppy markets. 

But with the S&P 500 Index gapping clearly below 2,700, now under a declining 50-day moving average, to boot, and the VIX duking it out at the key 20 level, this is not a high conviction type of tape for me, r anything remotely close to it.

The idea is to not be like Michael Cheritto in the clip, below from Heat (1995). Although enjoyable to watch we never want the mere action of the market to stimulate us to such a point where we gamble just for the sake of it.