Cash is a position. Choosing not to trade is often the most disciplined decision a trader can make, especially when a sector is broken and trends are misaligned.

Many traders feel compelled to buy simply because price has reached a “level.” That mindset leads to trouble, particularly in weak energy stocks where downside pressure is still dominant.

Why “support” is often misunderstood

Support is not something you predict — it’s something you identify after the market proves it exists.

• A level is not support just because it’s visible on a chart
• True support is confirmed only after price reacts and holds
• Buying before that reaction is guessing, not trading

If price begins to bounce and hold, then a trade can be considered — with risk defined beneath that level.

Important note

Buying at a perceived support level without confirmation usually forces traders to place stops too far away, or worse, remove them altogether.

Risk should always be planned before entry.

Moving averages are not automatic buy signals

It’s a common mistake to assume price must bounce at widely watched moving averages.

• The 20-day moving average does not guarantee support
• The 50-day moving average is not a safety net
• The 200-day moving average can fail — often dramatically

Moving averages provide information, not certainty.

Trend alignment matters more than levels

High-probability trades come from trend alignment across multiple timeframes. When those trends are broken, patience becomes a strategy.

• If the daily trend is damaged, upside expectations should be reduced
• Countertrend trades require tighter risk and faster exits
• No alignment often means no trade

Caution: broken energy stocks

When a sector is clearly broken, there is no obligation to participate. Many energy stocks are currently in damaged daily trends, making dip-buying especially risky.

There is no edge in forcing trades in weak environments.

The takeaway

• Cash is a valid position
• Support is confirmed by price, not predicted
• Moving averages are reference points, not buy signals
• Trend alignment across timeframes comes first

When trends are broken — especially in energy — the most professional move is often to step aside and wait for conditions to improve.