ChartSmarter Thursday Game Plan 1/15/15

Markets once again made a spirited move late in the session for a second consecutive day, but still fell well short of intraday highs. There is the belief that the “smart” money dominates the closing action, so perhaps bulls are clinging to that assumption. The S&P 500 fell .6% and the Nasdaq by .5%. The S&P 500 closed above the very round 2000 handle and the Nasdaq is now lower 4 consecutive days and 9 of the last 11, and another day spent swimming underneath the 50 day SMA. The longer that transpires the more ominous the outcome can potentially be. Lets remember how we have spoken about the last week of the 2014 being the largest ever capital infusion into mutual funds and that “dumb” money is often wrong and a strong contrarian signal. Of course one can base their investment decisions on that and blindly wade in and out of the market, but that is where technical analysis comes into play. Price is omnipotent and thankfully that has kept me long, although quite frankly not as long as I would like to be, even with my gut telling me that a nasty correction awaits. If I followed my gut I would have been short long ago and out of business. What the best traders do, and I still fight this all the time, is let their stops be what closes their positions and not emotion. Letting winners run and being very impatient with losers. I am still long and waiting for the nasty correction, and my stops are in place.