6 Simple Strategies To Trade The Wolf’s Meow

Art Installation in Santa Fe, NM

How many of you are as weary as I am of trying to find yet another creative way of saying the same thing each day about the market?

Oh, for those of you new to the Daily: I’m referring to the diversion between the strong and the weak sectors. Also the diversion just among the Modern Family members. And, of course, the relatively tight trading range in the Dow over the last 6 weeks.

Meow Wolf: When we assume we will hear a loud howl from an intimidating wolf’s mouth and instead hear the milquetoast meow of a housecat.

Yet we know that nothing lasts forever. Any catalyst-the election, aggressive military action, a substantial weather event, some unexpected economic data, or whatever else not immediately on the minds of most us-will cause a shift.

Anticipating the shift without knowing definitively when or how that will shift will develop, in which ways can an investor prepare?

Eventually, the wolf will howl either in agony or in ecstasy.

Agony connotes a sharp market selloff. Conversely, ecstasy implies a market melt up.

Anybody who claims to know the fate of the wolf at this point is conjecturing. What we do know for certain is that A fate awaits the wolf thereby all of us as well.

We prepare by following 6 simple strategies.

Any existing positions deep in the money, we have already trimmed and either widened or tightened the trailing stops. The decision is based on overall market conditions.

Greatly reduce market exposure. At this point, weaker positions or those that were deep in the money and sold off are gone. The portfolio’s main position is cash.

Before establishing new swing positions either long or short, we have carefully considered the risk/reward. If we cannot see at least a 2:1 ratio based on technical chart points, we pass.

If so inclined, we day trade to catch one-day momentum.

We exercise extreme patience. For long trades we look at instruments in bullish phases that have corrected to support levels and/or ones in bearish phases that have blown off and look ripe for a rally.