I am a trend-following momentum options player -- and, as a result, I find it nearly impossible to find the exact time to get in or out of the market. Some prefer to play that game of tops and bottoms, but I want to be in the middle of the trend -- to get in before anyone sees me, and ride it out. That means I will almost always be late to get off the train and late to get started. But, tor my trading style, that suits me just fine.
With that in mind, the start of the year has seen an enormous streak of winning sessions, all-time highs in some indices and some multiyear milestones eclipsed. However, the market has not had much of a correction -- so it has not accommodated those who have wanted to get in. As the old saying goes, the market will make the majority of the crowd look foolish, and if you've been on the sidelines waiting for a correction -- well, the market is doing its job.
I suspect a pullback may be in order sooner rather than later, and such a move will present a great buying opportunity. But where and when? Ha! That's the $64,000 question, and it's the reason I don't play that game. Much like when you take a shower, you pretty much have to stick your hand under the running water, test it and only then jump in.
The pundits and talking heads will tell you this and that about the right timing, but I've found use of charts and technical tools to be the most efficient method, as this offers me the best odds of getting it right. Many believe a 3% correction is in order, which would take the S&P 500 down to a support zone at 1450. Yet, after the market ripped higher to start the year and got overbought, it just went sideways for about eight sessions, then moved higher.
Wasn't that a good spot to get on board, right as the market digested gains? All I'm saying is this: Listen closely to what the market is telling you -- and if some selling materializes and then volume dries up, it may be time for you to get involved.