No Interest Swing Trading This Market

The stock market has been moving sideways since the start of December and while there have been leading and lagging sectors for opportunity, we’ve mostly gone no where.

Here’s a chart of the small caps, Russell 2000 $IWM:

Where does that leave us today?

  • Trends are higher.
  • Momentum is non existent.
  • Earnings season is upon us.
  • TheĀ inauguration is now 2 days away.

This type of extended period of consolidation has my attention as ranges like this tend to lead to volatility expansion.

This means we could resolve into a perfect looking continuation pattern within existing trends, or it could get messy and begin to spiral lower.

The signs are mixed, and I’m not interested in guessing through upcoming events.

We trimmed the bulk of our exposure over the past couple of days, locking in a series of small gains and continue to hold a roughly 85% cash position.

These ranges are tight enough that a single emotional day or two could begin to set the next directional leg into motion and we’re ready to adapt to that when a higher probability environment comes along.

Just because we’re traders, doesn’t mean we should be trading.

Good luck out there.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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