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We made two shows this Monday:
They say that markets test not only levels but also people. While the major U.S. stock indexes are consolidating in a sideways range, the recent pullback in momentum stocks is testing the patience of many investors and traders.
How you approach the current environment depends on your market philosophy and your time frame of operation.
Swing traders aim to sell on strength because we believe that a prolonged upside move is followed by a pullback or a range-bound action. The goal is to compound our capital quickly by capturing hundreds of 5% to 20% short-term movers in a year.
Trend followers tend to sell on weakness because it is the only way to seize the meat of a long-term trend. The aim here is to capture a few big gainers in a year.
There is no right and wrong approach. The important thing is to have a clear process that you follow diligently – a process about finding setups, defining position size, exits, and overall market exposure.
In today’s Momentum Monday, we share our view of the current price action in SPY, QQQ, IWM, IBB, RARE, AMGN, ILMN, XLF, WFC, JPM, V, MA, AMZN, SNAP, etc.
Don’t forget to check out my newest book: Swing Trading with Options – How to trade big trends for big profits.