Another day, another finish short of 4,200. As well as the index has been trading, it sure is having a heck of a time getting above this psychologically significant level.
As I wrote subscribers earlier today:
Stalling before the fall? Or pause before the next rally?
While both scenarios could easily play out, until proven otherwise, we continue giving the benefit of the doubt to the rally. Holding near the highs is a sign of strength, not weakness. While I would get concerned if we cannot get above 4,200 over the next few weeks, pausing at these levels for a handful of days is a very normal and healthy thing to do.
More important than the lack of follow-on buying is the absence of contageous herd selling every time stocks dip. The market is acting well and the path of least resistance remains higher.
GME smashed through $200 resistance Tuesday afternoon and that surge of buying continued Wednesday. This breakout is very much buyable, but a person has to have an iron stomach, be incredibly nimble, and view this as a very short-term trade. Take profits early and often because they won’t last long.
As I wrote previously:
Tuesday was that day and now we’re sitting on 20% profits. Not bad for a few hours of “work”. But don’t get complacent, this thing falls even faster than it climbs. Be ready to take profits at the first hints of trouble and no matter what, do NOT let this trade slip into the red. This could be the last time this stock gets to these levels.
Profit from the hysteria, but don’t fall for the hype.
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