Ignoring the News & Watching The Charts

By Harlan Pyan

The following is an excerpt from today's premium update at All About Trends. Enjoy a free 15 day trial to their premium service and receive daily stock picks, market analysis, and a complete trading plan. Promo code: zen

While the markets continue to digest the recent move off the September lows with the SPX doing so via a pullback (price) and the NASDAQ Comp. doing so sideways (time) many market leading stocks are trading to the beat of their own drum hence its a market of stocks.

I keep looking at the two short term index charts and keep saying to myself that with all the Washington debt ceiling shutdown showdown and such getting louder and louder everyday then how come the market isn't getting hit harder, how come leading stocks continue to either push higher or are content with just sitting vs. selling off? How come the indexes are pretty orderly here? One would think with all the Washington noise going on out there we'd be selling off harder than we are.

But we trade what we see, not think, hear or fear. We also have said let your stocks tell you what to do by the action they exhibit from a portfolio standpoint and our watch list too as a way to smooth out what may be “News Is Noise” volatility well folks one can also apply that to the markets as a whole as well.

And even if we do roll over on some Washington news? Is it really anything to be overly concerned about? We say not really as we have major supports all lined up just below which to us would probably mean some in flight turbulence for a little while IF it were to occur. So, government shut down or not we are still within an overall uptrend in the markets. In the event the markets react negatively? It just means a deeper pullback within an overall uptrend. Heck we'd also see it as a buying opportunity. So if it were to occur? Just sweat it out and let that dust settle.

In the meantime rather than stew over what could or could not happen let's pay attention to what the charts are saying as we trade what we see around here. That said we have a lot of names that are setting up.

Lastly, let's back up to the June lows and the September lows for a moment again. Know what those lows had in common with our current market dilemma? One word:

Trading the Uncertainty

We've all heard the phrase markets hate uncertainty right? Well psychologically that's another reason why markets look like they do. Know what happened once the uncertainty was removed? We took off with the biggest part of the move taking place in the form of a gap. Once the veil of uncertainty was removed keep in mind one also ended paying up for anything they bought vs low risk entry points. Think chasing a bus in a micro time frame. That's the price one has to pay for certainty. From a chart perspective? It also will mean buying away from the low risk entry point hence more chart pattern risk vs closer to a support, so in a weird twisted sort of way waiting for the certainty means actually taking more chart pattern risk.

For us back then it was all about what we were seeing in the charts of many individual stocks out there coupled with the indexes tagging supports and key Fibonacci retracement zones all in the face of uncertainty fear. This current climate looks strikingly similar so let's pay attention to the action vs. the noise errrrrr news.

Game Plan For Next Week

Friday we said:

“Once again, while the indexes are pulling back, leading stocks continue to act well with many making new highs, so that's how the market confirms our thinking of continuing to buy stocks that trigger from Pullback Off Highs patterns.”

When you see our long side watch list what you'll see are a lot of names that have been staging Pullback Off Highs (POH) all within clearly defined uptrends.

Come Monday we'll be putting money to work on the long side in the face of uncertainty and fear all based upon trading what we see. We may not be able to do them all and neither will some of you either but we'll be doing some so the rest of this weekend get prepared so you are ready for it.