You have control.

In a market producing daily gaps, overnight reversals, and intra-day whipsaws it seems that chaos is now in control of a traders destiny.  Not true.  As the CEO of your trading business, you have control and are ultimately responsible for your trading decisions.  I have to admit this was a very hard lesson for me to learn and it cost me a lot of time and capital before the truth of that statement sank into my hard head.  I would blame the news, some talking head, earnings the President or anything else I could think of for the reason I was losing money during volatile markets.  The truth is the problem was me!

I was the one deciding to trade when there was no edge.  It was me pulling the trigger, and I was the one that needed to accept the responsibility of losing money when I was trying to fight a volatile market.  While it’s true someone is making money in the market every day that doesn’t mean your particular style or skills will.  If you feel like your fighting the market and consistently losing money, then you probably are.  You are in control.  Stop trading until the volatility subsides and your edge returns.  One of the hardest things in the world is to face the person in the mirror and admit you are the problem.  However, if your consistently losing money in this environment perhaps it’s time to have that face to face an realize you have control.

On the Calendar

We kick off the 2^nd week of March with a light day on the Economic Calendar with no expected market-moving scheduled.  We have three bond events and the TD Ameritrade IMX which intends to show how investors have positioned themselves in the market.  Keep in mind that the FOMC minutes come out Wednesday of this week.

On the Earnings Calendar, there are just over 34 companies expected to report earnings.  Although all earnings are important if you happen to hold or thinking of buying a company that’s expected to report, I don’t see any particularly market-moving reports today.

Action Plan

Friday was sure discouraging as the Bears overwhelmed the bulls closing the Dow down 572 points.  The good news is that four major indexes managed to hold above their 200-day moving averages.  The bad news is that each index closed the day with a bearish evening star pattern that produced another lower high in the current downtrend.

I have mentioned that the volatility created by political spin I consider to be one of the most challenging environments for traders.  Huge overnight reversals and nasty intra-day reversals can happen the instant a new spin from the media or tweet comes out which means retail swing traders have little to no edge.  Chart patterns and candle patterns which is the bread and butter for most swing traders only serve as traps that deliver big losses and chop up accounts in such a whippy environment.  Once again the overnight futures are producing a big gap and suggesting yet another reversal with the Dow currently looking to open 150 points higher.  With overnight whipsaws that are this extreme, trading is hard to distinguish from betting red or black on a Vegas Roulette wheel.

Trade wisely,

Doug