The Trump Rally Continues!!! What now???

It looks like Mark Cuban had it wrong. Not surprising of course. However on Monday night he was looking pretty smart. But it appears the market was concerned about the transition of power rather than who the president would be. At least that is how I view it.

The market is gaping up .44% 30 min before the open and is now very overbought short term. It did not take long to work off the over sold condition.

If your looking to add a small portfolio of stocks the prudent course right now would be to wait for a pullback. This portfolio would be one to hold until next May.

My handling of the last mean reversion trades was not a bright spot in my trading. I  sold based upon information that I had been reading that if it got out would most likely have sunk Clinton’s chances 3 or 4 days before the election. The opportunity loss was not that bad however since I sold when the market was up .5% and the market reversed that day to down about .5%. But then as it turns out I would of ended with a gain rather than a loss with the rally we are seeing.

So the lesson is on these mean reversion trades that when you enter the trade stick by the trading rules. Once you find winning methods do not let the human mind sabotage your success.  The thinking needs to be done at the time of entering the trade. After that you have to let the chips fall where ever they land. So it would not of been a wrong decision to not execute the mean reversion in the first place with the elections around the corner and volatility sky high.

And also in retrospect I would not of been very happy when the Dow was off 1000 in overnight trading Monday. Even with proper position sizing a 1000 point move against you in the Dow is going to sting!!!

But, all trades are an educational experience and its the best way to learn. If you don’t learn as you trade you will not develop into a good trader.

Today I might try a breakout trade. Mean Reversion is off the table. So it might be a light day for me on the trading end. We will see.

I received a lot of feedback regarding information on asset allocation. Its a very complex subject with many different approaches. I am happy to share what I have learned over the years and glad that everyone appreciates it.

Remember I am always available via email for any questions you might have.

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


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