One of life's little pleasures is being treated like an insider.
We've all watched those movie scenes where there's a long line outside the popular club and a huge bouncer stands beside a velvet rope. The velvet rope is fancy – but it really doesn't hold anyone back. It's just the symbol that separates those who are on the outside from the insiders.
This same thing happens in real life, too, though there's usually no velvet rope…
It's when you go to the bank and the new teller is struggling to help. But the branch manager steps up to the window and says, "Mr. Barton, so good to see you today and thanks for your patience. Step into my office and let me take care of this for you personally."
Or – and this is my favorite – I go to my favorite sausage store where the owner is a master sausage and salami maker. He motions me over and reaches under the counter to cut off a piece of his newest cured creation and asks me for my opinion. My one-word reply: "Stunning."
He tells me that he'll be in full production next week but he can spare a link a two for his "best customers."
And while I can't offer up personalized service at your bank or tasty sausage samples, one of my jobs here at The 10-Minute Millionaire is to keep you on the inside when it comes to market information.
That's why I keep you up to date on my insight about the market narrative.
And today, I want to make you a market "insider" by taking you behind my mental "velvet rope" to show you my thinking about trade setups…
A Trip Behind the Velvet Rope
There are plenty of pundits out there scratching their heads wondering what's keeping this market up.
But 10-Minute Millionaires know that our market "narrative" has kept us on the bullish path through North Korean saber rattling and multiple natural disasters.
In our latest weekend edition, I gave you the bottom line on my current thinking.
Here's a quick summary:
So many people have been negative about the markets.
In addition to the problems with North Korea, people have cited:
- Age of the current bull market (second longest in U.S. history)
- High stock index valuations like various price/earnings ratios
- High level of bearish sentiment (as measured by surveys) despite high stock prices
I actually do watch these things as well. I just don't let them cloud my vision of what the market clearly is doing.
Price has the final say.
Here's what price is telling us: Index prices are not challenging even the closest support levels.
We see that visually on the chart:
To be frank, until we have a couple of closes below both of these levels, there is nothing bearish to talk about.
And even a pullback to the lowest level on the chart above would only be a 7.5% drop.
While nothing to sneeze at, it would really be pretty normal for the market to have that kind of pullback.
Dare I say, it would even be healthy for a market that hasn't had a 5% pullback in over a year to take a breather.
What Would Alert Me to Be More Cautious?
About the Author
Nationally recognized technical trader. Background in engineering, system designs, and risk reduction. 26 years in the markets.