Using Rules to Navigate an Uncertain Market

With all of the domestic and international news events dominating the financial media, there are certainly a lot of ongoing issues that can affect the mindset of investors. So much so that it can be a distraction from what is really going on in the market.  As investors, it’s important to be prepared and stick to your buy and sell rules.

William O’ Neil’s CANSLIM strategy,  based on historical studies of chart patterns and investor psychology, has proven itself time and time again. For example, base patterns, including the popular cup-with-handle, are not new occurrences. Base patterns have been constant in financial markets for over 100 years (See Tennessee Coal & Iron 1898, Northern Pacific 1900, or Bethlehem Steel 1914).  

Since no one knows whether the market will go up or down,  we have to prepare ourselves. Whenever you initiate a new position, you should set rules in place to protect yourself in case of a failed breakout or a corrective market. The rules will help you make your decisions based on price-action rather than emotions. 

Studying charts and chart patterns can help you stay tuned in to the market. Studying charts can get you out of the market when the indices and leading stocks are flashing distribution and get you in early when they start to show strength.

Keep running your screens and contact your MarketSmith product coach to make sure you’re taking advantage of all the features. As always, we are here to help.

Best Returns,

The MarketSmith Team

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