Riding momentum is harder than it sounds. It is can be quite difficult to sit quietly and let stocks keep running up. It is impossible not to wonder if maybe things have gone too far and a turn is about to occur. We don't want to give back any of profits, so there is always this little voice in the back of our head tempting us to take some gains. As the old saying goes "no one ever went broke taking a profit."
It is hard to find an active trader that hasn't sold at least a few stocks prematurely in recent weeks. Some are shaken out by minor pullbacks and others just can't resist selling into strength. Their moves appear to be prudent, but this is not a market that rewards prudence. This market rewards those that refuse to question it -- and stay with it no matter what.
To effectively trade, I constantly strive to stay mentally in tune with the price action. To me, price action is truth -- and I want to embrace it and run with it. While I'm still sticking with the strength, it is becoming increasingly difficult because there just isn't much new merchandise left. Riding momentum is much more difficult when you have to find new things to buy that are mostly extended already.
I'm tempted to sell everything I have left -- not because the stocks aren't acting right, but because I want to mentally reset. The market won't cooperate and reset for me, so I need to reset myself mentally and get back in tune with the price action that way.
No matter what I do, I want to avoid trying to call a top simply because I'm tired of the lopsided, upside action. If I can't change the market, then I have to change my thinking. Riding the momentum is the way to go, but if you are rational human being you will struggle with that at some point when a rally is as tenacious as this one.
Join Jim Cramer, CNBC's Jon Najarian and Other Experts Oct. 28 in New York
Jim Cramer will host CNBC's Jon Najarian, TD Ameritrade's JJ Kinahan, famed analytics expert Marc Chaikin and other market mavens on Oct. 28 in New York City to share successful strategies for active investors.
You can join them as they discuss how smart investors can make the most of options trading, futures contracts, fundamental and quantitative analysis and great ETFs to buy right now. Participants will also get a chance to meet Jim and other panelists and take photos.
When: Saturday, Oct. 28, 8 a.m.-3 p.m. ET
Where: The Harvard Club of New York, 35 West 44th St., New York, N.Y.
Cost: Special sale price: $150 per person. (Normal price: $250)
Click here for the full conference agenda or to reserve your seat now.