Being Patient is Being Disciplined. It’s part of trading. – September 30, 2021


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You know how “sucky” the market is, that’s a term that I just made up. The S&P ( NYSEARCA: SPY ), I don’t like to make predictions but I’ve seen this pattern before, this little zigzag here, I drew this on the 20th, 10-days ago, and the reason was that I could envision the market doing just this. Because when we’ve got a big long-prevailing uptrend, a bad line there, and you get a big key break, and then you get a rebound.

A lot of times you are going to see this thing do just what it’s doing here. So you can look at this on the trend break, on this move down, and say, okay, this is not going to go down forever. Now, newer traders think that it will and they short the market there. Bad move, because what happens is, when a stock market comes down like this, you’ve got this massive volume, you are going to get a snapback. You don’t even have to question why, yours is not to reason why, yours is just to do or die on that short hill.

You are going to see this rally but then the real deal is here. Right when the rally comes back to the 50-day moving average. By the way, this is a pro tip so pay attention, you will get this rally back to the 50-day moving average. Now, if it just keeps going up and then it fulfills this trend channel here and keeps going, that’s fine. Then you look at this whole thing as a “shot across the bow”. That was the first warning sign that there was something wrong with the market. But hey, no big deal because we got a nice move and we are back in business in this uptrend. Okay, fine.

Let’s say though, that this does not happen. This is again, where the proverbial rubber meets the road. So it comes up here to the 50 and then there are a bunch of sellers. Well, in that case, this is just a failed snapback. And then if this pulls down from here, that’s kind of when you could say the wheels are coming off the wagon and we could have a more sizable correction.

I will say, I am kind of expecting that but I am not betting on it. It’s what I am looking at because I know this if we have this correction, and I have been through big massive corrections over the last 3 decades but in all of those corrections, it is not just a straight down thing like that. It’s zigzag, zigzag, zigzag, zigzag, so we are going to get all kinds of fakeouts right here. But what you are seeing is, you are seeing a definite change in character in this.

We will look at it this way, this is the yellow light, the yellow flag, whatever you want to call it. As I am looking at this I think the S&P ( NYSEARCA: SPY ) is going to have a real tough time climbing back up. So we are under pressure, the market is under pressure. Look at the Q’s ( NASDAQ: QQQ ), kind of a similar deal. Not quite, but this is a pretty nasty thing.

So now we get back to Tesla ( NASDAQ: TSLA ). The thing that I like about Tesla ( NASDAQ: TSLA ), we’ve had this on our list for a while as an active trade, we’ve got a nice trade going here, fine. But the thing that I like about this is, it continues to hug this line. It continues to hug this uptrending resistance line. So this is a strong stock, right here, this is really, really strong. It should not be doing that if it is going to perform like the rest of the market. It should be breaking down, there are a lot of those.

Snapchat ( NYSE: SNAP ) had a big breakdown off of this squeeze. By the way, this is probably buyable right now if you are a short-term trader. But you’ve got stuff like Palantir ( NYSE: PLTR ), the perpetual heart breaker has failed here. You look at all kinds of stuff, Facebook ( NASDAQ: FB ), failed. It couldn’t happen to a nicer guy, he’s still a billionaire. You’ve got Google ( NASDAQ: GOOGL ), failed. You’ve got all of these companies that failed. ARK ( NYSEARCA: ARKK ), run by the famous market savant Cathie Wood, awesome, broke down.

Now, we’re back with Tesla ( NASDAQ: TSLA ). This is kind of where you want to be. You can’t really buy it here, that makes about as much sense as it does to have bought all the other times when this hit this line. It’s like this is where the losers buy, this is where the winners buy. And you can say, well yes Dan, but if I bought I would still be a winner here. Yes, well you didn’t do that, did you? Instead, you would say, buy it there. So this is not a stock that you want to fart around with right now, as far as trading it. But for me, this is a real easy hold. It is just a hold, so that is what I want you to do.

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