Splash Zone Weekly Wrap Up: 7/10/16

The path of most resistance – that is what the market did this past week and since the Brexit bottom. For nearly two years the market has been unable to do anything once it climbs above 2100, being rejected on multiple occasions and leading to sell-offs that wipe out gains in the blink of an eye. 

But this time it has done it, and has done it in the most improbable of ways – going from 1991 to 2129, and looking at opening up at new all-time highs today on the S&P 500. Most eye opening is that it pushed through the 2040-2134 level without one bit of resistance on this latest go-around. The highest probability route was the one I chose this past week, that like what we have seen, time and again, the market would fail to make new all-time highs. It did not do so. Instead it took the least probable route and formed new all-time highs. Incredible, yes.

Trading for me never has been and never will be about being right. It is about being profitable. Here in the past week, I was wrong. The market changed its behavior and has pushed through massive resistance, and if the pre-market strength holds, we’ll be getting out of our remaining three positions. There are times where you have to accept being wrong in order to be profitable. You see, if I don’t recognize it early and often when I am wrong, then I make my stake in trying to be right. Trying to be right comes at a price and for me, I would rather admit I was wrong on a trade so I can quickly move on to being profitable on my next trades. 

Does the losses concern me that I have taken on the past five trades? No! I have a solid track record of knowing that this comes with the territory for any trader. That it takes one respectable trade to wipe out those losses, because of how tightly I manage those losses, and I am confident that will be the case here again. 

Ultimately, moving away from this 2040-2138 range will be the best thing for the markets and for trading. Moving into new territory and creating new patterns will be a great change for the market and something that hasn’t been seen now in two years. Long-term, this is good for the market and I am excited trading it and the profits that it will yield us.