Don't Try to Be a Hero in This Market

 | Feb 02, 2018 | 1:30 PM EST
  • Comment
  • Print Print
  • Print
Stock quotes in this article:






The challenge writing a financial column, especially as a trader, is most people expect a trade. Every day. Give me an idea. Show me something. Help me make money. Help me learn.

Best advice I can see right here is make sure you can sleep this weekend. Don't go playing hero. Don't force a trade. Don't sell out of panic. I'm not going to sit here and pretend I'm perfectly positioned for this. My open positions are running around 90/10 today. That 10 is the percentage trading higher.

I jumped into Aquantia (AQ) yesterday and shares are now down some 7% today and over 5% from my entry. But nothing has changed fundamentally for the company. The deal they signed Monday is the same today as it was yesterday and the day before. Sure, it hurts on paper, but there's nothing pushing me to sell and since I didn't buy on margin, there isn't anything that can force me to sell.

The debate this weekend will be whether this is the end of the bull market trend or simply another pause that refreshes. The SPDR S&P 500 ETF (SPY) is threatening to close under the 20-day simple moving average (SMA) for the first time since mid-November. You remember? The SPY closed under $256 right before popping above the 20-day SMA the next day and roaring almost non-stop to $286 over the next 10 weeks.

Are there technical breaks? Lots. If you set your parameters short-term. Longer-term, we have an oversold weekly candle in the context of a long-term bullish pattern. This all brings us to timeframe. If you are a day trader or swing trader, then this week is likely more important to you than if you are a long-term investor.

While I don't equate crypto-currency with equities, I've discussed with Bob Byrne (you remember him, right?) the notion of a crypto crash bleeding into equities. Maybe he had the idea first. Anyhow, doesn't matter. What does matter is we are actually beginning to see it. Did you know the correlation between the SPY and Bitcoin Investment Trust (GBTC) measured over a 20-day period ran near 1 from November 2017 through the end of the year? Same can be said for a trailing 50-period. The correlation was nearly perfect for two solid months. It has broken recently, but wouldn't it be ironic if the action in something like Bitcoin led equities? Obviously, this isn't enough data to draw a conclusion, but it is worth noting.

If there is a name you've been aching to buy and it is down by 5 or 6% today on no news or related news, then nibbling here is not the worst thing in the world, but I wouldn't commit to full positions or aggressive buying. That's simply my opinion and how I'm approaching the day. But I am not a seller this morning. This is a day to watch and wait. Plan your actions for next week now, so you can skip out on any emotional baggage.

This commentary originally appeared on Real Money Pro. Click here to learn about this dynamic market information service for active traders.

Columnist Conversations

Will someone finally just buy this company for $55 to $60 a share and call it a day? Board ended talks with th...
View Chart »  View in New Window » AIG WEEKLY AIG 15 minute trigger chart
In theory everyone hates the idea of invasion of privacy by social media, but in reality most people make an e...
In answer to Brian's question, I don't think Sunday night's Uber fatal self-driving car accident pos...



News Breaks

Powered by
Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.