As a trend following momentum options player, it is nearly impossible for me to find the exact time to get in or out of the market. Some prefer to play that game of tops/bottoms, beginning or end. I want to be in the middle of that, get in/out before anyone sees me and ride out the trend. But, I will almost always be late to get off the train and late to get started. That suits me just fine with my style.
This month of January has nearly broken records for performance. The start of the year has seen an enormous streak of winning sessions, all time highs in some indices and some multi year milestones eclipsed. However, the market has not had much of a correction, and as such has not accommodated those who want to get in. As the old saying goes, the market will make the majority of the crowd look foolish, and if you’ve been on the sidelines waiting for a correction – well, the market is doing its job.
I suspect a pullback may be in order sooner rather than later, which will present a great buying opportunity. But the big question — where and when? Ha! That’s the 64K question, and the reason I don’t play that game. Like in a shower, you pretty much have to stick your hand under the running water, test it to see if it’s just right and then jump in.
The pundits and talking heads will tell you this and that about the right timing, but I’ve found using charts and technical tools to be the most efficient and offer me the best odds of getting it right. Many believe a 3% correction is in order, which takes you down to a support zone at 1450, yet after the market ripped higher to start the year and got overbought it just went sideways for about eight days, then moved higher.
Wasn’t that a good spot to get on board as the market digested gains? All I’m saying is this: listen to what the market is telling you, if some selling ensues and then volume dries up, then it may be time to get involved. The Fed told us today we can still be in an risk environment.