A Ramble: A Common Short-term Trading Pattern and My Bird's-Eye-View of the Market

With this being only my second official blog post, I thought I would do something that I do rather well: ramble on for a bit. I'll at least provide a little structure to my incoherent stream of thoughts though: 1) A theme that has been working well this earnings season on a short-term basis; 2) What to do during this chop-fest of chop (or what not to do), as well as my overall stance on the market on an intermediate basis aka from a bird's-eye-view. 

1) Short the gap ups; it really is that simple. If the powers that be decide to gap up a stock for whatever reason, short the hell out of that thing right on the open! Clearly, my glib analysis is meant to be facetious, but I have seen this pattern of gap ups being sold despite what may be considered "good numbers." Case in point, take a look at the recent action in DATA, SCTY, YELP, NFLX, RIG, an YUM, to name a few. They gap 'em up only to be hit down even harder. My debut post even discussed my recent trade in DATA after it gaped up 

If you're not fortunate enough to get a gap up to short, they'll just gap you down to the ground instead, a la WFM, FEYE, FUEL, UBNT, GNC, MCP, ZU, GOGO, and of course TWTR (wasn't necessarily earnings related). It seems the common theme is simple & clear: HIT THE BIDS!

There are some exceptions to the rule though. Punch up a chart of EA, GMCR, MDLZ or SWKS. These lucky ones have somehow managed to actually hold their gaps. It will be interesting to see if names like these can follow through to the upside or instead just range and go sideways. 

2) So what to do? Again, I'll try to make this as simple as possible: DO NOTHING! I don't say this out of some type of anger or hatred towards the market, but I honestly just don't see anything appealing to me on an intermediate-term basis / swing long perspective. Note: this is my opinion; do what works for you. The only position I have on right now whatsoever is this WFC, which I've been holding for 3+ years & I'm not looking to sell any time soon, despite @allstarcharts despise of the financials currently (a must-follow by the way). 

If you must do something, do as @The_Real_Fly says and just buy the damn Old Man Portfolio There's no disputing the fact that these names, or as I like to call them - the Old Fart Portfolio, are showing great relative strength to the market right now. For me though, I'd just prefer to sit in cash for the next several months until the market changes, as I believe it will once the summer is over. I think until then, though, this frustrating market will continue, so take your trades, focus on what's In Play, and don't expect too much. Know your strategy and know your process (http://ivanhoff.com/2014/05/08/know-process/). Understand if the market is conducive or not to your trading personality right now or not. As for me, other than intraday trades, I'll be sitting on my hands for the next several months.