Not everyone may find it favorable but volatility continues to pick up and it is making for some interesting trading action. The indices bounced following a weak open and some of the big earnings winners such as Facebook (FB) and eBay (EBAY) are building on early strength. On the other hand, breadth is negative and the Dow Jones Industrial Average is negative even though Boeing (BA) is rising again.
This much more inconsistent market action than we have been used to in the past month and foreshadows some bigger swings as we move into the weaker time of the year seasonably. It is likely that anticipation of earnings tonight from Apple (AAPL) , Amazon (AMZN) and Google (GOOGL) are keeping some bids under the market so far.
One of the keys to my trading approach is to focus on keeping my accounts as close to highs as possible. This requires a shift to more defensive trading when momentum slows. If I can keep accounts near highs when the indices are correcting, then outperformance becomes very easy. To keep accounts near highs you have to be ruthless in cutting the stocks that start to lag and that is what I'm doing.
I'm still on the lookout for stocks I like and have made a few small additions this morning. Smart Sand (SND) provides sand that is used for oil exploration and is expected to earn $1.01 in 2018. Ichor Holdings (ICHR) recently preannounced strong earnings and guidance and still looks cheap based on its number.
While looking for more new buys I will be managing existing positions closely. Keeping that account near all-time highs is the best way to produce superior returns over the long run.