04Apr3:31 pmEST

You Cannot Analyze (or Trade) the Market if You're an Emotional Wreck

Corrective markets feature emotions running fast and furiously, with market players alternating between fits of fear, panic, angst, even anger, and relief, exuberant, and joy, before repeating the same cycle over and over. The reality is that the mercurial, scatterbrained types are much more sizzle than steak in terms of trying to catch every single market move. 

Instead of riding the emotional roller coaster of a corrective market, we want to stick to our working thesis of keeping net or overall exposure to the market lighter than usual, all the while staying opportunistic for trades which present themselves as more compelling than usual.

In the current tape, bulls vigorously and valiantly responded to what could have been an ugly day of bloodshed after the Dow futures were down more than 600 points this morning. At the moment, it now seems that bears are on the run as bulls may finally get a few days of relief. 

Retail and some footwear plays seem to be especially compelling, beyond the Under Armour turnaround chart we noted earlier today in a prior blog post. To be sure, the likes of TSLA and CELG, scanning across the Nasdaq, are far from out of the woods of their corrective charts. 

But they sure are putting up more of a fight today than they have in a while. And I am going to respect that by not throwing on any shorts in the mean time. 

As for longs, note the Deckers weekly chart for cold, hard analysis. Again, removing the emotions of the moment shows us that all DECK did was rally hard from early-2017 up to its prior 2014 highs, then back off. 

Indeed, all that backing off did was see a mild pullback to the rising 20-period weekly moving average (arrows, orange line). In other words, "Trade Wars" and emotional roller coasters mask the overall strength we are seeing in some retail plays (and tech, select healthcare and industrials, to boot). 

The Ichabod Crane of the Ret... Stock Market Recap 04/04/18 ...

 
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