Market End Higher for the Week… Now What?

Another interesting week for the broad markets. We experience four days of painful ups and downs with one day (Thursday) moving higher. Attempting to make sense of the last three months isn’t worth the mental anguish. The economy is slow, Washington is spending and blaming, Europe is pushing more money into the system, Asia is volatile and commodities want to move higher on weaker dollar and inflation talk. Outside of that things look great. You have to implement different strategies when the markets are choppy in the name of capital preservation and sanity. I reduce the size of positions in half and give wider stops. That effectively gives me the same dollar risk in the portfolio which for me is the ultimate objective. That is one example of what is happening currently.

Remember it vital to understand the cycle or trading environment you are in to trade/manage money effectively. If it does not meet your psychological profile stay out of the market. There are no rule about time in the market that makes you better at trading or managing money. It is important to understand you style versus the market environment currently. Non-trending markets are the worst psychologically, but can still be profitable if you understand your comfort zone.

If is Friday and we are going to do a video wrap up for the week with some thoughts on what we are watching going forward. Click on the video an listen…