Is it a market of stocks, which all move at once? Or is it a stock market where stocks trade on their own merits? My belief is that sometimes all stocks move together, but not usually. Our job is to find low risk, high probability setups in stocks and to get in as momentum begins, take some off at a pre- determied level as the stock moves in our favor (daily R2 on longs), raise stops and listen to the market. Listen to the MARKET! Not the news or someones opinion of it, listen to price action!
Stocks are risky, that is why it is our job to manage risk. Today we bought AMBA at 6898 with a stop of 6780 which we raised to 6849 as the stock began to move higher. Our goal was to sell 1/3 of the position as R2 was hit, it did that at approx 1:30 Est. Selling 1/3 there resulted in a gain of 1.99/share. At the same time AMBA was experiencing a strong part of its rally, the SPY was selling off quickly. If you panicked you would have unnecessarily sold the stock for a small loss. Trade AMBA based on the price action of AMBA. Trade the SPY based on price action of SPY. Don’t overthink! Only Price Pays! Let it work for you, have some faith in your trades, have faith that a stop is there to make sure you don’t experience a large loss if the market disagrees with your trade. A consistent, disciplilned approach will always beat an emotionallly driven, reaction to news approach.