Hi Guys,
The market had a nice rebound day on Friday, but it's down a bit this morning. We're still squarely in the middle of volatility right now.
I haven't made any new trades yet today. You may have noticed that my watch list is small and my stock holdings at this point are limited. During normal market conditions I typically have 6-10 stock positions open at a time with a bunch on the watch list. But in these particular market conditions, my portfolio and watch list are very limited.
That's a naturally-occurring phenomenon associated with my stock trading strategy. I trade pullbacks on stocks that are in strong uptrends. In periods when the market has a noticeable drop, it often triggers a lot of stock pullback trades since the market kind of drags down most individual stocks along with it. If the market goes down far enough, there comes a point where there are very few uptrending stocks left, which in turn limits our trades.
It's actually like a safety mechanism that's built into the strategy. If there aren't strong uptrending stocks, then we aren't going to make trades, and therefore if the market ends up going down further we'll have limited exposure. It's one of the ways that this trading strategy can protect us.
So we're kind of waiting in the wings for uptrends to start occurring again. And this is something that happened many times throughout the decades-long back test. There were plenty of periods where stock trades were limited. Waiting patiently for trades to set up is just as much a part of the Mindful Trader experience as anything else.
That said, my MES futures trades (and their corresponding SPXL trades) will continue to trigger in volatile market conditions since they use different strategies. So although my normal stock trades may be limited until we start to see some clear uptrends emerge, there might still be plenty of futures trades coming through.
My TSCO position hit its stoploss today. Its price fell off a cliff overnight. I closed BAX this morning since it reached its time limit. It locked in a small profit. I only have a couple stock positions open right now, and neither of them is looking happy right now.
If you have any questions or feedback, I'd love to hear from you.