Is the Stock Market Healthy or Unhealthy?

THE WEEK

I have a way of looking at the market and then saying to myself, it’s a healthy or unhealthy Market.  By definition healthy means I can make good money consistently.  What I call an unhealthy Market is one where making any gains is a struggle.  The direction -up, sideways or down – isn’t part of the criteria.

What a Healthy Stock Market Looks Like

There is an easy to see trend either up or down. That enables you to ride the market up or down and easily make money based on proven strategies.

What An Unhealthy Stock Market Looks Like

It is difficult to understand what direction is the Marketing trending.  It is hard to determine day-to-day; Lots of price gaps up and down; Price movements inconsistent; Lot’s of misleading candle signals.

After a month plus of a healthy Market, I thought, “O-boy, longer trades will do well, again.”  I spoke too soon and this week my trades placed for longer time periods struggled and I was back to making money on shorter time-line trades and a few day trades.

This is fine if you have an account of at least $25,000 and have day trading privileges, but those without those privileges may struggle to place trades. The best you can do is sit tight and wait for the market to give you something to trade (trade what you see - not what you want to see).

So might be next for the market?

Small Market pull backs (Bear and Bull Flags) are healthy.  They are natural resting points in directional movements.   What I have to do now is determine if we are moving back into chaos or will the Market stay relatively healthy.  Here’s is the Market since the beginning of 2023 – a nice steady climb with a few resting pull backs.  If the Market resumes its uptrend, I will say it is still healthy.  I have drawn a red line that if the price breaks through, I will call it unhealthy and chaotic and once again turn to shorter time-line trades.

How Am I Doing?

I had a great week with a 14.4% gain for the week.  I am now back on track to double my trading account in our 10-week DATA class.  That’s the good news.  The not-so-good news is I made most of gain on just one trade.  It was a definite home run.  My preference is always to be the queen of singles.  Lots of singles equals one home run and is a lot less stressful trading.