On Tuesday, the S&P 500 added 0.2% as the index finished four points shy of the all-time closing record.
So much for last week’s panicked selloff. Luckily, this week’s resilience didn’t surprise regular readers. As I wrote last week:
A market that refuses to go down will eventually go up. After a couple of failed selloffs lastlll week, it became increasingly obvious that if this market were going to fail, it would have failed by now.
Now, I will be the first to admit that last week’s selloff dumped me out at my stops. No matter my outlook or how temporary I think a bout of selling will be, I always sell at my stops, no questions asked.
Sure, I could have held through last week’s dip, but that would have been undisciplined, and that trading strategy requires more luck than skill.
Since I don’t count on luck, I wasn’t willing to hold a violation of my stops. Good thing I’m a nimble trader and was ready and willing to buy the subsequent bounce 24 hours later.
Remember, just because our stops get hit doesn’t mean we give up on a trade. Sometimes it takes a few false starts before a trade finally works. Anyone who gave up last week missed out on a great trade.
As for what comes next, Friday’s reclimation of 4,900 looks like the real deal, and 5k is up next. We might not go straight there, but the odds are good that if we’ve come this far, we will close the deal soon.
I have no idea what happens after we reach 5k, but until then, this market wants to go higher, not lower.