Get ready to rumble.
The “model portfolio” was never invested more than about 30%. That included the two test-phase holdovers we”ve discussed previously. On Friday, I took exposure to ZERO.
Being a trading site, the portfolio should employ trading strategies. And the broader market”s price action had signaled a significant threat of falling sharply on Monday. I don”t get those signals often, and they don”t always extend, but they can be damaging when do.
My daily videos and blog posts last week all underscored that this was not a time for increasing or initiating significant positions. After that preface, I did continue pointing out setups that were confirming earlier setups, or that had not yet been invalidated.
The broader market took center stage Friday. Weakness had been developing in NASDAQ / Russell stock indexes that reflect more speculative activity. But on Friday, the Dow Industrials and S&P 500 reversed down sharply from fresh highs. High-volume breaks under prior lows on Fridays can be seminal events. There is a significant risk that this action confirms the speculative weakness, instead of ending it.
This risk may pass immediately, but that doesn”t change whether it is a risk. Trading strategies have both the luxury and the responsibility to adjust quickly, a tactic that investment strategies should not employ. The correct action for subscribers was to consider selling any position they held as a trade. The incorrect action was to sell anything held as an investment.
Friday afternoon”s “Trade Alerts” each carried the same commentary, which is essentially repeated above. Despite that text, and despite our ongoing conversation about risk control during the past several weeks, I think the optics of several rat-a-tat-tat sells was taken more seriously than it was intended.
I see many comments on the Activity Feed from subscribers reiterating the points I am making. And I see many comments focusing only on there having been sells. We”ll never all be on the same page — at alternating times, my information may be rudimentary to some and alien to others. But we all must greet each day with the common understanding that Marijuana Stock Technical Trader is exactly that, trading.
Understand this, as well: If, indeed, a market consolidation or correction is beginning, then trading tactics will be even more compelling and useful. It is naive not to expect some such phase(s) to grip this sector. I think it would be premature to happen now, so I”m excited at the rebound potential after this risk warning passes.
Some of this weekend”s favorable news items may goose prices Monday morning. The initial action might seem reassuring, but Monday”s closing prices will be more telling. That initial action might also prevent us from buying cheap in the morning if the broader market is extending Friday”s slide. I”ll speak to that in the morning.
Meanwhile, look forward to this weekend”s video of highlighted stock coverage. And this afternoon I”ll send an Alert inviting you into the new “Livedesk” feature where you can request “instant analysis” of charts that you request, while also discussing more about chart patterns, Fibonacci applications, and other technical analysis techniques.
Enjoy!