BWT Weekend Update - Nov. 20

This market just has no quit in it. This should be good news for the intermediate and possibly longer term health of the market but on the short term it continues to just get more ridiculous. It does appear that a pullback is starting in the overall market but the Russell 2000 (IWM) simply is not having any of it. I assume if the market continues to pullback, this index will decide to play catch up. For now, its strength continues.

This non-stop strength has done two things. It has created a ton of beautiful technical patterns out there in a wide variety of stocks both big and small low priced and high priced. However, it has also created such extreme short term moves that any normal looking consolidation period is going to have to last longer to allow the trailing major moving averages to catch up to price to make any new long position in these extended names even possible or close to low risk.

This will either work out or it will not. If the longer consolidation patterns do not form, then I will continue to operate in a slow small methodical process. If we can back and fill and setup properly, followed by a move higher, then I will look to really swing larger position sizes on an EOD basis. Until some sort of rational trading (not this extreme v-shape moves up and down) returns to the tape on an EOD basis time frame, I am going to continue trade in size only on an intraday basis and keep EOD position sizes manageable according to the volatility in the tape.

This weekend, as should be expected in a tape that is very overbought and that also pulled back overall on Friday, there are no new long positions for Monday’s session. I do have two oversold-turned-momentum RSI swing trade positions I am taking on Monday that I go over in the video lesson for members but outside of those two speculative positions very few quality stocks gave anything remotely close to a good-to-great reward-to-risk ratio signal. Some backing and filling, I will say once again, is greatly needed.

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