Tackle Today: When you play defense and the market rips

It happens

Traders,

It was only one week ago that the S&P 500 sliced below support, sending warning signs across the land. Those who heed signals from the short-term trend likely cut exposure in response. This go-around defensive measures ended up being necessary because by the end of the week recouped all that was lost.

How should we think about this?

First, not every support or resistance break results in a monster trend reversal.

Second, it’s better to play defense only to regret it a week later if the market snaps back than not to play defense and see the market melt lower.

Those who got smaller on Monday/Tuesday of last week could have reversed course on Thursday/Friday when the support break was invalidated. Or not. Each trader must decide how much they will react to short-term trend reversals.

Sometimes the market is messy.

What’s important is that you have a consistent process that you can stick with through thick and thin.


Chart of the Day: NVDA

Nvidia is attempting to break out over $280 resistance this morning.



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