November marks the beginning of the seasonally strong period for the markets. We enter that period with the market oversold. In addition, we enter this period with record turmoil in the U.S. and geopolitical tensions continuing to increase.
So what is one to do in this environment? As we learned last year this seasonality is something to consider but is not an absolute profit maker. Last year we had a record drop in the market that cost me and a lot of traders. Historically I would buy a portfolio of 10 stocks and keep them until May 1. The record drop last year shook me out of the positions early and I missed the record rebound that occurred.
Human nature interfering with a good method of trading. Happens all the time:)
So this year I am forgoing the portfolio trades and sticking with the Breakout and Mean Reversion trades. I might add a portfolio trade if something really stands out.
As we enter November I am long several mean reversion trades. In addition, I have two breakout trades. Since we are entering a seasonally strong period I am going to loosen up on not holding overnight as typically during this period you are cutting your gains by not holding these trades overnight.
I am still going to use as a filter the 10 day MA on the Daily Chart for the environment for Breakout Trades. It’s a rather simple filter but is an effective one.
Today the market is gapping up about .20% 1.5 hours before the open. If we do gap down this morning I will be looking to add to my mean reversion trades. In addition, there are several breakout trades I am keeping a watch on.
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:)
Good Luck Today
RickJ’s Handicapping Picks