Will Rally Run Up Or Give Way To Gap Down?

The market rally continued Thursday and added to the angst of traders working this market.

Despite the uptick, in one thought camp there is hope this market has hit bottom and is about to roar higher.

The other thought camp is skeptical, thinking this market is still choppy and the bottom could fall out quickly.

That may seem like a normal day of trading. But, last year’s economic and market collapse — no matter how strong the recovery to date — is an ever-present reminder that there is no place for “hoping” and jumping into trades.

Simpler’s traders are daily consuming data and chart analysis to determine whether this week’s rally will hold or if a gut-punch drop awaits. Signs of returning to a “normal,” directional uptrend aren’t concrete no matter how much hope traders hold.

This is all a stark juxtaposition of how to make money in the turmoil and how to keep safe what is in the trading account.

Traders need to watch out for head fakes as the market chops along. A good example might be passage of economic stimulus funds with some hoping the economy lives happily ever after while others view the money surge as setting up another flush.

Recent sharp gaps and spikes need to be replaced with a steady momentum trend to solidify a long-term plan. Until that shift is more concrete, the Simpler plan remains to seek shorter term, high-probability trades with limited risk and strong upside potential.

We’ll keep it simple, avoiding fixating on any particular ticker while focusing on moments in time that reveal high-probability setups.

Leaving emotions aside, we’ll keep asking ourselves, “Is this trade worth risking my money?”

We Saw: Economic stimulus hits economy, market — 

• Indexes rally higher across the board
• Covid-19 vaccinations continue to roll out
• Debate continue over cryptocurrency validity

We’re Watching: Always weighing risk vs. reward —

• Simple, high-probability trades
• Keeping hope, other emotions at bay
• Setups in: AAPL, GOOGL, DKNG, MP, BIG