At the mid point meeting of our current mentor program much of the weekend talk was about the current state of the market – no surprise there. If you are a long term trend follower the current market sucks and unfortunately this is simply the nature of the market. There are times when it is good to be a longer term trend follower and times when it is not.
However, there is no rule that says you have to be in the market all the time. The notion of time in the market is one of the great myths of trading with no evidence to support it. What is more important is not the concept of missing the good days but rather how effective missing the bad days is – I have harped on about this endlessly.
What is interesting is the simple tools you can use to actually make a determination about being in the market. The market at present is churning with fairly stagnant volume – although volumes are not as poor as some professional commentators would have you believe. In understanding whether volume is higher or lower now than it was a year a go is a determination that can only be made by counting and unfortunately most financial journalists cant count. Hence some of the outlandish statements I have heard about trading volumes in the past month or so. As you can see clearly by the chart below average volumes are not half they were a year ago.
Also on the chart below I have stuck a trend line where the market is capping – any market not making new highs is a pin in the arse. And until the market either shakes this malaise out of its system by collapsing altogether or making mew highs then equity traders will find it problematic.