Stocks don’t always do ‘what they are supposed to do” in fact many times, they will surprise us and do the exact opposite of what we expected, that is what risk management and stops are for. Mental flexibility is one of the key attributes shared by successful traders, it keeps our opinions from getting in the way of what price action is telling us.

This week, the markets did do what they were supposed to do but, as usual, they didn’t make it easy. The weakness in semiconductor stocks over the last couple of months has kept us suspicious of building strength in the $SPY $QQQ $IWM and $XLF but we know that there is no one group which will always lead and we have to trade each market based on its own individual setup, not based on theoretical models. We noted the bullishness of the “time correction” on Wednesday and Thursday, key levels of resistance were taken out.

See the video below for more detailed analysis. Enjoy your weekend.