While there is plenty of green on the screens after the big gap-up open Wednesday the challenge of this market is catching intraday movement.
The big moves come overnight and then much of the market trades flat during trading hours. For example, the Russell 2000 ETF (IWM) is up 1.17% but is close to flat intraday.
This is great action if you are holding position trades but does make it more difficult for day traders that are trying to catch intraday trends. While there is still plenty of movement, the big gains come overnight when there is a higher level of risk.
In all my years of trading my "bread and butter" trade has typically been buying a position at the close and selling into strength the next morning. It is a simple strategy and works for me quite well, although it is highly dependent on finding the right trading vehicle. Of course, when you hold overnight, stop levels can be "traded through" with a gap down open so there is more risk.
The higher level of speculative trading is helping this strategy to work even better as many retail traders are scanning for stocks after the close and then gap up them up the next morning. I'll be looking at a variety of charts in the last fifteen minutes of trading to see if anything catches my eye.
This market has been strong enough for long enough it can use a rest but I don't expect to see the speculative trading suddenly slow down. There are too many traders that have had a taste of success recently and they are not going to go away until they have suffered some painful losses.
It takes a while to discourage folks that have been enjoying a market like we have had recently.
I'll keep on hunting for the next opportunity.