I've been reading Jim Cramer's articles about stocks for more than 25 years and have learned many different things from him. The one piece of advice that I have found most helpful is to focus on what can go right rather than what can go wrong.
The reason that advice is helpful, is that it is at the heart of momentum trading. Momentum trading works, because there is nothing more profitable than riding a powerful trend. You can't ride a trend if you are constantly looking for reasons for it to come to an end. Staying with a trend is much easier when you are focused on what can go right. What are the positives that can drive the market even higher?
The natural inclination of most people is to expect that the good times will come to end and disaster will suddenly occur. We want to avoid the pain of any loss, so rather than maintain an optimistic mindset, we start to look for problems and cultivate pessimism.
Far more money is made by being optimistic rather than pessimistic, so it makes sense to focus on what can go right rather than what can go wrong.
What is going right in the current market is another new time high and no signs yet that this extended market is going to rest. Many stocks are extended and there is some increased volatility, but there is nothing to indicate that we are going to see the same sort of reversal that we experienced on Christmas Eve in 2018.
I'm knocking out some good trades mainly in the biotechnology sector. Sarepta (SRPT) is my "Stock of the Week" following good news of a royalty deal with Roche (RHHBY) . Reata Pharmaceuticals (RETA) is breaking higher out of a very nice looking chart and Aurinia Pharmaceuticals (AUPH) , one of my top picks for 2020, is hitting a new high.
There is some rollover in the indexes, and I'm looking for at least one good bout of selling soon, but ask yourself "what could go right"?
