08May3:27 pmEST

There's No Such Thing as a Perfect Game in Trading

The various head-fakes we have seen in this headline-driven market of late have slowed down even the most enticing of growth long setups out there, mostly clustered in the software-related complex. 

Markets like these often reinforce the concept that as speculators we must understand that chasing a perfect record is often akin to chasing a mirage in the middle of the desert as dehydration takes hold. Instead of forcing in theses and trades to try to attain perfection, we must understand that trading is often a game of streaks.

The hot, euphoric streaks and cold, unlucky streaks can materialize at any moment. On some level, the luck factor is out of our control. Naturally, we must be introspective enough to objectively assess whether our decision-making has remained constant throughout the process and that we are, in fact, sticking to our typical discipline. 

But as a headline-driven market takes hold, we must be willing to slow down and let the tape digest all of the politics and what-not before the next potential wave higher starts for growth monsters like TWLO. 

After outperforming last Friday and this past Monday, for example, the Russell 2000 Index's small caps, housed in the IWM ETF, suffered a nasty selloff yesterday and are lagging the senior indices today. With $159.50 lost, $158 became a more important level to hold, which was promptly lost, too. 

As you can see on the updated 30-minute IWM chart, below, even with today's broad market bounce on more political headlines those small caps have yet to recapture $158, reinforcing the notion of just how random some of the swings can be in a macro-drive tape. From one moment to the next, a breakout and breakdown alike can appear to be equally as viable. 

Hence, my bias at the moment is to focus on not being unnecessarily chopped any more than I already have, unwilling to chase the illusion of a perfect game in an obviously imperfect market. 

Interesting Correlations Stock Market Recap 05/08/19 ...


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