What to Do if You Missed the Big Slide

 | May 26, 2013 | 11:00 AM EDT
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When the market has just moved in a big way, and you find yourself sitting on the sidelines, it's easy to feel frustrated. This is particularly the case when you've been awaiting a pullback for weeks, only to miss the "perfect" entry. But don't let it get you down.

You've seen me track the broad move higher over the past several weeks, looking for that ideal reversal trigger to take in my own trading -- and the market hit my resistance target nearly to a T, as shown on the below weekly chart of the SPDR S&P 500 (SPY). But guess what? Despite this, I was among those who failed to catch the channel breakdown on the 60-minute charts several days ago.

SPY -- Weekly | Source: TradeStation

Source: TradeStation

Your full-time job may be a trader, but for most of us it still takes a back seat to our family -- and on Wednesday I had an unexpected office assistant in the form of a 22-month-old. OK, the truth is that it was me in the "assistant" position, and the markets were no longer the center of my attention

What was my reaction when I was finally able to check in and saw the carnage?

"Well, darn. What's next?"

I wasn't always so nonchalant about missing the largest moves of the month. In fact, "annoyed" would be a mild way of describing what would go through my mind. But when it comes to the markets, there really always is tomorrow.

The key is to be patient -- which isn't always the easiest thing to do! Yet, while I missed the main market free fall that began Wednesday, I've still caught other short trades that have triggered both ahead of and in the aftermath of Fed chief Ben Bernanke's speech to Congress. More important, I know many more opportunities lie on the horizon.

Right now, the first thing we should do is to let the market catch its breath.

The problem many traders run into, after missing such a large price swing, is that they will try to jump on the very next trade that crosses their path, determined not to miss out a second time. Unfortunately, by this time emotions may be overriding logic and these folks may be missing some of the key details that differentiate between higher- and lower-risk strategies. Or they see those details, but nonetheless take the higher-risk strategies that they typically would have passed on. 

SPY -- 90-Minute | Source: TradeStation

Source: TradeStation

So what am I waiting for?

When the market takes jumps off highs, it typically does so in two steps. On Wednesday, and heading into Thursday morning, we saw that first step. Now I am watching the intraday charts, particularly on the 30- and 90-minute time frames, for that second continuation.

I've also compiled a list of securities that I feel favor that second step lower. In other words, they seem likely to experience further downside, with a second wave of selling on the daily time frame. Here's a selection of that watch list, which you'd do well to watch throughout the coming week: Public Storage (PSA), Suburban Propane Partners (SPH), Wynn Resorts (WYNN), Ralph Lauren (RL) and BlackRock (BLK).



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