Markets sold off today with most indices finishing off their lows at the close. Talking heads chalked the losses up to North Korea and perhaps that is true, or was that a convenient excuse for the markets to pullback after a nice run up? Truth is we don’t know and it doesn’t really matter. Our job is to read the general markets every week, or day if need be and let our process play out. We noted a follow through on the rally last week that put us back in uptrend mode, at the same time we said to not shoot from the hip with multiple trades until the rally proved itself. We did stick our toe in the water with a new long trade last week with a stock in a hot sector but we also held our two short positions. LUV was one that we had taken swing profits on and we are in trend following mode with the second half of our shares and AXTA, a newer short position that we are now up slightly on. Why did we hold those if we saw the possible makings of a new uptrend? Simple answer is, we were not stopped out. We believe that if you let your trades play out and let your trading portfolio transition naturally instead of shifting gears every time the markets flinch your will be better off in the long run. With all the big red numbers on the screen today, our portfolio was only down 0.12%.
Remember, trust your process and let your stops work. Don’t stare at your equity and judge your trading success with every tick in the market during the day. Take one day at a time and follow the plan with little exception. You will give back some gains on your trend following positons in the end, that’s just how it works. My advice is to turn the volume down on your TV so as not to be influenced by the talking heads and pontificators. Instead, put in the time and follow your plan and let’s see what tomorrow brings.