"Outstanding people have one thing in common: An absolute sense of mission."
Oil and gold jump, bitcoin slumps and China calls news of declining bond buying "fake." After a one-day pause, the indices are shrugging off a minor bout of selling and regaining their momentum.
Over the past year the market has not only punished bears that are too fast to anticipate a top but has been cruel to those that react too quickly at the first sign of weakness. Wednesday the bears believed that a plunge in bonds, on news that China may cut back its buying of U.S. Treasuries, might be the catalyst that helped to produce a long-awaited correction. There was some selling pressure at the open but market players were mostly unconcerned and the indices rebounded quickly. Breadth was poor and there was some red to end the day but overall it was just a healthy day of rest after a straight-up run.
Much to the frustration of the bears, this market doesn't need much rest to regain its footing. Some minor downside is all that is needed to bring in the dip buyers and cause the bulls to worry that they may miss out on the next leg up.
I continue to preach that the best way to deal with this market is to forget the top-calling game and stay focused on respecting the price action and riding the trend. The most effective strategy to protect yourself from the inevitable reversal is to build a cushion of profits rather than try to anticipate disaster.
Recently we have had some unusually good opportunities to build profits in more speculative small-caps. Many of them have been blockchain and cryptocurrency related but there also have been good pockets of action in select biotechnology, China-related and oil names. That action, to me, is the key indication of the market's health. The speculative action will dry up fast when the character of the action starts to shift.
To best navigate this market forget the headline news, ignore the pundits and stay focused on price action in individual stocks. There is likely to be rotational moves that will make the indices less reliable so you have to be aware of sector shifts. When the good stocks stop working your money management should have you raising more cash and becoming more defensive.
In my trading, I constant harvest my gains and look for new setups to buy. When I can't find setups I like then my cash levels increase. I am a market timer by default and don't have to engage in the farce that I can time tops with precision.
We have minor gains this morning as market players look ahead to earnings season. I'll be working on my watch lists and digging for some setups to buy.