Over these last three weeks there has been some historically signifiant volatility with the major averages swinging 4-5% in a single day.  Although yesterday had some early volatility, the close of the day came somewhat near unchanged which has led to much tighter pivots in most of my names and in the S&P futures.

Most recently we have seen assaults on R4 and more commonly S4, meaning a breakdown sell signal, yesterday was ripe with S3 buy signals and many of my names finished the day on that signal.  Tighter pivots mean less risk and typically less reward, but in this hyper volatile world knowing your upside and stop targets is very important.

I am hoping that as we get into the late part of August, we see the volatility dry up and the market takes a nice breather for a week or two.  Then come into September with a refreshed attitude ready to make a killing.  Sell in May and go away again has been an adage that has worked to perfection, and with October starting the historically seasonal strong period for the markets, I would like to see a bottoming process occur in September.

For those that read my blog often, you know that I am very pessimistic about the US and Global economies and that I feel the only way to get out of this mess is with something major.  I do not think the markets are trading at levels indicative of how bad things really are, but that is not for me to decide.  As I teach my students, identify a trend, look for a pullback in that trend to an advantageous entry level, and then add if the trade is working.

That strategy will work regardless of what is going in the fundamental world.

Happy Trading!

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