Since I last wrote this column on Tuesday, Aug. 28, the S&P 500 is down about 0.8% and bounced off the 1,400 area on Thursday. After two indecision days Tuesday and Wednesday, some selling Thursday was healthy, especially when matched with intraday support.
In short, I still favor the long side here with a first target at S&P 500 1,420, followed by 1,440. Initial support is at 1,400, and secondary support is near 1,390, although the secondary support is less stable at this stage.
Given how far stocks have run off the June lows, however, I am merely a few percent invested at this time and waiting for a better signal to add to longs. Some consolidation is what I am looking for to establish a base from which we may be able to move a little higher still.
Most sectors and stocks I follow look good for some further upside, with one significant exception: Intel (NASDAQ:INTC). The stock looks weak, very weak.
Given the importance and leading indicator role that the semiconductor group, and Intel in particular, plays, this is hard to ignore. For the time being, though, I am willing to give the stock the benefit of the doubt and consider it an idiosyncratic issue not much related to the rest of the tape. But it doesn’t make me feel great, and I am watching it closely.
Now, because we are only a few trading hours away from a three-day U.S. stock market holiday and there is plenty of headline risk this weekend, allow me to touch on something I find much overlooked in most discussions about trading.
To be clear, I don’t profess to have a crystal ball or otherwise alien powers to predict movements in global markets. Throughout my thus far 14-year career as a professional trader, I have learned and come to fully accept, both consciously and subconsciously, that this business is a game of probabilities. In short, you win a few and you lose a few, but the order in which those winners and losers come is completely random — hence the struggle for many investors.
The difference between a winning and a losing trader is simply how he or she deals with the losses — mentally. If you know you have a methodology that works, then it’s simply a matter of letting the favorable odds work for you over time and not letting losses get to you. That is no simple feat, but for the person who is serious about this business, it is entirely surmountable.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.