Wednesday turned into another promising session for the S&P 500 as the index attempted a second bounce off of 4,400 support.
While it feels like we are chasing our tail when trying to catch the next bounce, that’s simply the cost of doing business. And I most definitely prefer tail chasing to the alternatives of holding a big tumble lower or missing the next big rebound higher.
Compared to those alternatives, a little tail chasing isn’t bad at all.
I bought Tuesday morning’s bounce, sold when prices retreated back near my entry points Tuesday afternoon, and bought the next bounce Wednesday morning.
By starting small, getting in early, keeping a nearby stop, and only adding to a position that is working, getting in and out of the market hasn’t been a problem for me.
And given Wednesday afternoon’s nice close, my stops are already near my entry points, making this another low-risk, high-reward trade. (That only happens when we are willing to act decisively.)
Maybe Wednesday’s bounce sticks. Maybe it doesn’t. But if I’m wrong and I get dumped out near my entry points, no big deal, I take my money and try again next time.
The most important thing is I stick with it because the real bounce is coming and I don’t want to miss it. (Every failed bounce brings us that much closer to the real one.)