dani-shay dani face dani quote

The runaway market…

When we last spoke, we discussed the extended state of the market, along with how to use Phoenix to give you a heads up to time the pullback.

Looking for a reversion to the mean — which is really all I’m looking for when I state ‘pullback’ can be tricky in a very strong, bullish market. 

This is exactly what we saw this week as the market refused to pullback. In fact, it made a nice rush higher, to close out at even higher prices — no pullback in sight! It wouldn’t have been much fun to be short through that move!

This is why trading with triggers, technical parameters, and an overall market outlook is so important. 

Let’s take a deeper look…

It doesn’t really do you any good to just continue to hedge and hedge, stepping in front of the proverbial train and continuing to take heat. 

That’s why I prefer to wait for a signal that the market’s pulling back — first. Of course, there are consequences to waiting. And, each trader must determine which option you prefer. 

For me, waiting means that sometimes I don’t have the most graceful entry. It means that sometimes the market will gap down overnight and I’ll miss some of the profits I could’ve potentially made on a hedge. Or, even worse, I don’t take profits at the best spot on my longs.

But, for me, it’s worth waiting for a trigger when it means I don’t have to fight price action.

Using Phoenix to identify when canaries in the coal mine appear is my favorite first step towards timing a reversion to the mean. It’s also my favorite method to stay long when I’m waiting for a rollover (because I’ll know when the situation shifts). 

So, what am I doing here?

For one, I’m starting to feel like this market is similar to the situation in January 2018, and I want to do a couple comparisons. What goes up — especially like this — typically will come down, but until it does, I’m sticking with relative strength until I see the canaries. 

As such, my analysis backs my belief that my energy is best spent there. It’s risky staying long at such extensions, but I’ve narrowed down my positions into a few select areas — the ones with the most strength. 

My most notable favorites right now?

XLY, including NKE, HD, TGT, ROST, and LOW. 

We have a strong economy — led by a strong consumer, and they’re spending money. Companies like these are defying the retail apocalypse, one customer experience at a time.

Leave a Comment

Up Next...

The road less taken

As the year heads quickly towards an end, it always leads me into an introspective state. I must not be alone, because over the course of the past two weeks, I’ve received an increase in emails from traders reflecting the same sentiments.  Here’s what they’ve said… The questions range from clarifications on trading plans, examination … Read more

Read More

The formula for success

Plus a super special deal As the end of the month draws to a close, I always like to reflect on what’s worked — so that I can do it all again next month.  Some of my biggest winners this month have been several of these names: WMT – 79% gain  TGT – 231% gain … Read more

Read More

Thankful for you

& our Black Friday Sale starts today!! Thanksgiving has always been one of my favorite holidays. I’ve always loved cooking alongside my parents, while my brothers and sister argue over who is going to wash the dishes. In the Shay household, we definitely make Thanksgiving a weekend affair. So today I just want to say … Read more

Read More

Subscribe Today!

Want to walk the path to trading success together? Join Danielle’s “Five Star Trader” E-Letter for market insights, tips, tricks, and special bonuses.

Sign Up Now

Free Downloads

Squeeze Checklist

When you find a squeeze, check these boxes to see if you’re looking at a higher probability bet.

Risk Checklist

Before we can make money we must define the rules that define our risk parameters.

High Probability Plays in a Directional Market

Download Danielle's free eBook

10 Steps to Becoming a Successful Trader

Commit to becoming a successful Trader

Strategy Selection Risk Gauge

Danielle focuses on creating a constant stream of income through the selection of trend-following, directional plays.

Upcoming Appearances

December 11, 2019
"Fast Money" on CNBC