Time to Study

This has been the craziest week for markets. January has been the craziest month for markets. Personally my account had huge swings (see my last blog post) but I came out on top by the end of the month making about 15%. I’m continuing to refine my process.

Weekly charts on indices don’t look great for longs. This week saw big distribution days and volatility. Forget the hype on certain individual stocks, the rug can get pulled on them just as fast if not faster than they went up and given what some brokers have been doing I wouldn’t want to be stuck in them anyways. Those traders learned about short selling and short squeezes, soon they will learn about bag holding. This is about playing the long game. Having your account live to trade another day/year/decade.

$SPY closing below 50ma. Watching for more downside.
$QQQ breaking and closing below 20ma. 50ma most likely next.
$IWM breaking below 20ma. 5 distribution days on volume. 50ma most likely next.

Silver has been trending, that I can get behind ($SLV $EXK $AG $PAAS $MAG). $UVXY / VIX has been hot the past couple days. Bitcoin names are moving again ($RIOT $MARA $BTBT $GBTC). I’ll be more focused on those type plays this coming week as opposed to playing other individual names while the indices are weak. I’d honestly rather sit this week out and study charts than get into trades that will probably have a high probability of getting stopped out. Or I’ll play this week like I did on Friday which is scalp all day. This is the time to study, to refine your process, to not get chopped up in every other trade and give back gains.

Can I be wrong? Can the market turn around tomorrow and go right back up to highs by the end of the week? Absolutely it can happen. I want to see strength first. I’m not going to buy into the market hoping that that will happen, it needs to start happening that way first. There could be a day or two relief rally before going lower (bear flag), there could be a V shaped bounce back to highs, indices could continue the cascade lower… Consider all possibilities and make a plan for them that way you aren’t making rash decisions in the moment with this much volatility happening.

Tight stops. Smaller position size. Focus on sell side / VIX / BTC / GLD/SLV / sitting on the sidelines and studying….. this is my game plan for this week.