Is it time to leave the markets for a while as the summer doldrums continue into Labor Day, or should we be even more alert and take advantage of the opportunities that are in front of us?
Trying find a theme to trading and investing is common as we look for others to lead us and to find the easiest path to success. Some pay attention to pundits and experts who plainly do not have your best interest at heart. Try as they may to convince you their argument is correct, it is rarely in sync with your timing or goals.
It makes better sense to follow your own path, and that includes themes based on the calendar. We are now in the month of August, often the hottest month for weather but the coldest month in the markets. Lately I've been hearing cries of "go away for a while," "step away and let others get burned," and "come back after Labor Day."
While such admonitions may have value, we may be able to play the market in front of us, even while recognizing that things may get dicey this month. I like to come in each day and week with an open mind and let the markets tell me what to do. I use a combination of tools that help me stack the odds of trading success in my favor.
They say luck is defined by preparation meeting opportunity. I'll take that all the time, though I don't want to be defined as lucky all the time. To be prepared for monumental moments can pay off handsomely.
Take Apple Inc. (AAPL) as an example. This stock had been up strong this year before earnings were announced last week, though it appeared a tech wreck was coming. Many sold this stock down as they believed even good numbers from Apple would be a sale. After all, it's the summer and what do people do in the summer? They sell.
They turned out completely wrong, as the company ripped higher after earnings.
Following that theme and unloading stock at the very wrong time (or shorting for that matter) would have cost you dearly. It didn't matter that it was August; it could have been January or May. The point here is to pay attention to the market action and react accordingly.
As for Apple, the world's first trillion-dollar company, it rolls on as the recent pullback from the highs prior to earnings was a great technical setup -- as it usually has been.