Making money on the long side has been easy lately and that has a lot of participants feeling confident that it will continue that way. When stocks keep coming back after scary shakeouts it can create poor trading habits which eventually come back to bite you hard when the market experiences a real decline and the stocks don’t bounce back quickly. Defense is ALWAYS job #1!
Regardless of what type of environment we are in or what your overall market approach is, risk management needs to be first in your mind. Don’t fight trends, have stops in mind, listen to the market. There will be a top to this market somewhere and the market (not a news headline) will tell us when to move aside. Right now there is no evidence of a top so enjoy the ride and have a plan to hold onto your gains.
Have a good weekend!