[QUESTION] - Individual Stock Set Ups And Overall Market Assumption

T

Tall Mike

When scanning for potential trades is there any use to having a view on the overall market direction?

For example, will you only take pullback trades on individual stocks IF your view of the overall market is bullish? The same goes for short setups.

Personally, I feel that this just adds another layer of complexity.

However, on the opposite end, when the market goes up or down, don’t most stocks tend to follow the overall direction?

Why even play individual stocks if that’s the case?

Thanks!
 
Tall Mike said:
When scanning for potential trades is there any use to having a view on the overall market direction?

For example, will you only take pullback trades on individual stocks IF your view of the overall market is bullish? The same goes for short setups.

Personally, I feel that this just adds another layer of complexity.

However, on the opposite end, when the market goes up or down, don’t most stocks tend to follow the overall direction?

Why even play individual stocks if that’s the case?

Thanks!
More...
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Yes; since stocks follow the market most [not all] the time.
I use etfs so I don't have to consider that.
Mainly I have + do consider if its bull or bear market.[ I think it was steve cohen that said] market=33%
sector=33%
stock =33%.
Even more so with sector/tech sector tends to be superstrong in a bull market.
 
murray t turtle said:
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Yes; since stocks follow the market most [not all] the time.
I use etfs so I don't have to consider that.
Mainly I have + do consider if its bull or bear market.[ I think it was steve cohen that said] market=33%
sector=33%
stock =33%.
Even more so with sector/tech sector tends to be superstrong in a bull market.
More...
Gotcha,

Yeah, he said that in an interview I believe (maybe for the Market Wizards book?), I know what you are talking about.
 
Tall Mike said:
When scanning for potential trades is there any use to having a view on the overall market direction?

For example, will you only take pullback trades on individual stocks IF your view of the overall market is bullish? The same goes for short setups.

Personally, I feel that this just adds another layer of complexity.

However, on the opposite end, when the market goes up or down, don’t most stocks tend to follow the overall direction?

Why even play individual stocks if that’s the case?

Thanks!
More...
You seem like a very thoughtful guy without ego not like some newbies coming here to show off their smart. Let me give you this newbie's opinion:

1. Scanner for published "winning" parameters, won't work for newbies like us because the "winning" parameters are long games, assembled over years of data and over hundreds of names. Typically the overall positive expectancy is modest, meaning it will take trading a statistically significant number of trades and names to bear fruit. Most of us are trading too few names and too few times to be fooled by randomness.

2. You work in some business, for yourself or for someone. To be good at what you do, you have to have real knowledge. Trading is no different. If you want to trade names, do what @Handle123 coached us: danced options around your name stocks. You have to know your name stocks like your kids to make it work.

3. Why names? Not enough size.

4. There are many ways to skin a cat. I make a living trading options full time but I am not an option trader. Think about it.

I am just your mom and pop retail, pros will laugh at what I wrote. But you are more like me than a pro so it may be more relevant for you.
 
deaddog said:
FWIW: I don't open a long position if the market is going down.

The probability of my stop getting hit goes up so why take on extra risk.
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True;
but depends on the trend/timeframe...………………………………………………………………..
Mr Mike;
I still like sector analysis, even with etfs; tech sector has been so strong/so long since 1980s/1990s/2020...……………………………………………………….. Good moves to upside+ some down.
Carl Ichan made money with a huge airline position; I never buy a weak/debt overload sector like that...……………………………………………………………………………………………………………..
 
Tall Mike said:
When scanning for potential trades is there any use to having a view on the overall market direction?

For example, will you only take pullback trades on individual stocks IF your view of the overall market is bullish? The same goes for short setups.

Personally, I feel that this just adds another layer of complexity.

However, on the opposite end, when the market goes up or down, don’t most stocks tend to follow the overall direction?

Why even play individual stocks if that’s the case?

Thanks!
More...
%%
I like that repeating pattern guide;
stock=33%,
sector=33%,
market=33%. [Discretion 1%/LOL ] Frankly, market 33% is maybe too much '' layer of complexity.'' Say the market is SPY/S+P500, well NQ/QQQ diverges so much , could ignore it more like 95.95% of the time.
Example =SPY made a new 52 week high in FEB, 2020;
not many QQQ/tech sector swing traders will wait 'till that SPY high gets taken out /LOL:caution::caution::D:D:D:D:D:D
 
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