Stock market commentary, analysis, insight and opinion of the RightLine Editors is available every Tuesday/Thursday evening & Saturday
afternoon. The following is excerpted from the:
January 14, 2021 - The RightLine Report
Notes From The Editor
Trends Are Always Friends
To get into trends early, look for stocks that have just made new four- week highs or lows. Also check the slope of the 22-day moving average. If it's leaning decidedly in one direction or the other, you can assume that the trend is relatively stable.
Keep in mind that the purpose of trading isn't to catch 100% of every move. The purpose is to be profitable, find stocks that are active within your time frame, and take a reasonable amount out of the anticipated movement.
There's an old saying that one should "never try to catch a falling knife." The same concept applies when anticipating reversals for entry purposes.
For example, instead of trying to predict when a descent will end, it's always best to exercise a bit of patience. Let the market find a bottom and begin the early stages of a reversal. Then it's time to enter long positions. That way you have a definite safety exit nearby in case the bottom is soft.
The same approach applies to shorting as well. No need to predict a top. Just anticipate turn-a-rounds at known resistance levels, wait for the reversal to start and then enter your trade.
Whether up or down a trend is a trend, and as you know the trend is always your friend.
~ Thomas Sutton, Editor
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