S&P 500 Is Taking a Breather and I'm Resting

"The greatest mistake we make is living in constant fear that we will make one." - John Maxwell

NEW YORK (TheStreet) -- A pretty quiet Wednesday as we're seeing stocks and markets roll over a bit to blow off Monday's very overbought conditions. (My apologies for missing Tuesday.)

It has been nice to be able to hold stocks for at least a few days. I recall when this round of real-time trading kicked off, several people were not thrilled about taking a trade only to be stopped out not long after.

That's the way the cookie crumbles. The stocks weren't ready and I wasn't willing to take a loss, or not a large loss anyhow. If you are quickly stopped out or a position goes against you, it is simply that markets are bad and cash is the only real option. If a breakout works, it tells you things are good.

It isn't rocket science but a lot of people have a problem wrapping their heads around it. There is a time to be in the markets and a time to be out.

I want to thank the many who've written to me who've kept all their cash during the correction and are now adding to gains from the last strong cycle, rather than trying to just get back the gains lost in trying to trade the correction/chop.

I know I harp on about it often but being able to do nothing sometimes is one of the most important skills to learn.

Second could be the ability to identify those times to do nothing -- but I try to help in that regard as much as I can.

Right now we are in a great swing trading environment and we are selling out of recent winners as stops are hit to book gains and we will be looking to get back in on weakness or the next great setup in a few days to a week. We have a lot of patterns that are setting up to be cup and handles but they need more time to rise and then form a handle.

That said, we can swing trade for three to five days usually to catch each step higher as we form the right sides of the cup. Let's move right into the charts before we look at the few stocks I have left and talk about why I sold the stocks I did.



SPY hit the 196 area I talked about and is now rolling over a bit.

I'm not expecting a major release to the downside, rather a nice sideways to down chop, perhaps to test 193 once again.

You could call this type of pattern a bull flag if it plays out, but it's too early to say yet.

I am not really looking for shorts. I'll enjoy a bit of time not at the screens so much as we set up for new buy points.

That said, I will be at the screens or very close by in case something does pop up.

You can think of the markets almost as a pulse.  We just had a nice pump, and now the heart is building up the pressure for another pump.

Have a swell evening and Thursday.

Warren

At the time of publication, the author held no positions in any of the stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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