One lesson I have learned, and it took me a while to catch on to this lesson, is that one should only go long stocks if the general market is in a bull market. Sure, there will always be some stocks soaring while the market sinks, but I have found that the odds of a profitable trade increase dramatically if the stock you are buying is in a bull market
and the market itself is also in a bull market.
I define the general market by using the exchange traded fund, SPY, which follows the S&P 500. Below is a daily chart of SPY:
The S&P 500, unlike most other stock indexes around the world, is in a long term up trend. For me, this means, mentally, I should only focus my mind on potentially going long stocks. However, the short term trend is currently down, so while I am scanning for long candidates, I cannot actually pull the trigger quite yet on any of them.
With this week's strength, the short term momentum is beginning to change, and SPY will likely enter a new short term up trend soon, which means I'll be able to buy stocks again.
Below is a stock that my scans pulled up that I am eyeing:
I have no idea what product or service the stock above provides, but it is the sort of chart I am going for - strong up trend, with a nice consolidation to digest the recent gains.
