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Narratives are just as important to good, profitable investing and trading as they are to good stories.
And in either pursuit, if you "lose" the narrative, you're, well, lost.
In the market, following a narrative means keeping on top of the main, active driver for the markets at any one time.
That's what I use to guide my Stealth Profits Trader plays – and it frequently adds up to more cold, hard, cash money in our accounts.
Right now, the narrative isn't very exciting. It's the tight, sideways box we've been in as we await the strong break to the upside I'm expecting.
But that doesn't mean there's nothing to do – or nothing to look forward to.
How to Play the Wait for the Next Leg Up
Look, the markets are much stronger in January than they were in November and December, and the entire global market is playing "catch up," which will only help move U.S. markets higher.
In the meantime, it pays to avoid big speculative plays and focus on adding strong, must-have stocks, especially if they can be caught during an isolated pullback – we did just that in my Stealth Profits Trader and were rewarded with some nice profits – triple-digit gains – in less than five days on two different stocks: PNC Financial Services Group Inc. (NYSE: PNC) and furniture icon La-Z-Boy Inc. (NYSE: LZB).
It's interesting to watch how that played out in the broader market on the charts:
The power of developing and sticking to our narrative combined with decisive action equaled big wins.
Now, there's a lot of talk these days about a "melt-up" followed by a crash, but my charts tell me that's not the case. I don't think we're going to have to wait much longer for the next big move.
Until it comes (and it should be soon), focus on strong and strengthening stocks at irresistible prices.
About the Author
Nationally recognized technical trader. Background in engineering, system designs, and risk reduction. 26 years in the markets.