Have You Missed the Train?
As we watch one of the greatest rallies of all time continue to sail along, what do you do if you have missed it? This is actually an easy answer. NOTHING!
Now that the buy and holders are out talking about how you have to be in it for the long term, yada yada yada, keep your wits about you. People from this school of thought cite what happens to your long term returns if you miss the 10 biggest days, therefore you always have to be fully invested. What they neglect to mention is the far more profound effect missing the 10 biggest down days would have on your returns. Without repeating what I have stated in newsletters in the past word for word, suffice it to say that if you could have managed to dodge the 10 biggest declines it has a far more beneficial effect than the negative effect of missing the 10 biggest up days.
It is impossible to catch all 10 of the biggest up days and dodge all 10 of the down days and vice versa. I state all this for one reason, there is alot of BS out there that serves only to ehance money managers incomes and not necessarily your personal returns. They benefit from having your money fully invested at all times, no wonder they think it is such a great idea. As we look at the above Weekly SP 500 chart obviously had you known in advance that this type of move was going to happen, going all in at the low would have been a great move.
I was bullish if you go back and read posts from the last couple of weeks of February from last year, so I did have the low pegged. However, I too have missed a great deal of this upward move. In fact as hard as it seems to believe, I have actually made money shorting this move. I have had 3 good batches of individual stock shorts that I have highlighted in here at the time I did them, where I made a good bit of daniero during these little retracement moves. I have not made much on the long side I am ashamed to admit but it does not bother me in the least bit. Why?
You have to define how it is that you trade or invest your money, there are many different approaches that can be used. You also have to identify your time frame, this is critically important. You cannot be a jack of all trades in this business. The reason that cannot be done is that when you cross timeframes, what looks really bearish in one time frame can be very bullish in another. If you constantly jump back and forth you will undoubtedly be wrongway feldman and miss move after move. I do not care who you are, nobody is going to catch every move, NOBODY!
Assuming you accept the previous premise, it should be no problem if you have missed this move. You should be looking for what you will do next, or at another market that might be setup to make a nice move. After all the move is long since gone and now you are buying right into major long term resistance between here and 1235. We could also sail right through there with no problem and go right into new all time highs. Am I predicting that, NO. The point is that who knows when and where this move will end. These running markets can just creep along for very long periods of time.
I have highlighted 2 buy spots on the chart and have to admit I only played one of them, the first one. I did not do the second one due to the divergence in the accumulation/distribution oscillators at the top of the chart. You can see how they were diverging on the decline into the second red arrow. As a result I did not do that. Do I wish I had? NO. I follow rules and I have found when that type of situation exists the probability of the trade working are greatly diminished. I pass on them with no regrets. Also, you can see at the bottom of the screen that the trend indicator has been diverging for a very long time, very misleading. This does not happen often with this indicator.
Net net, this has been a very strange rally in so many ways. I have asserted here that I believe it is being manipulated by our good friends at the PPT. Whether that is happening or not, the fact is that internally this has not had what typical bull markets have, so do not feel too bad if you have missed it. Rest assured that the people that have ridden this are likely to ride it back down without getting out. If your long time horizon is to just hold stocks forever, you never should have exited and never should again. I do not subscribe to that approach, I am a short term trader.
My short term approaches have not given me the buy patterns I would have hoped for during a move this big upward, but so be it. Other markets have given me my signals and I have profited every month but 2 of the last 12. Be comfortable with your own approach and do not look back. Learn from the mistakes you make, but don't dwell on them. I tend to dwell on them for about a day, then move on. I want to learn from them, but not let them drag me down. If you have missed this, get over it and determine what you will do next.