The market’s been pretty quiet going into the beginning of the week.
Oracle on Monday morning was all red, which signaled a weak open.
By the way, I mentioned the following during my Market Minutes video on Monday:
In addition to the amazing things Oracle does for us every day, it also has what I describe as an “off-label use.”
What I mean is that its red and green signals can be used as indicators to determine how aggressive to be in your trading.
For example, if you’re seeing all red, calm down, wait things out, at least until 9:45 am, and then begin trading if it’s appropriate.
On days when you’re seeing a lot of green, maybe you can be a little more aggressive and go in earlier.
Now like I said, what I described above is only one use for those Oracle signals. But it doesn’t even begin to encompass everything our algorithmic system can do.
I couldn’t trade without it and neither should you. It predicts big winners almost every day.
If you’re not using Oracle, you’re missing out on something that could transform your trading.
Learn more about Oracle today!
When you’re making these decisions about how aggressive to be, always keep your risk tolerance in mind and trade accordingly.
And to learn how to better manage your risk when you trade, check out my video.
Besides a weak open, we also saw a blah, sideways pattern in the broad market on Monday.
And very little news…
It was like NOTHING was going on.
So what the heck IS going on??
We’re currently in the last week of August, right before the long Labor Day weekend hits.
And oftentimes, that means we’re entering a slow time for the market, which is why what we saw in the beginning of the week made a lot of sense to me.
As you’re probably well aware, we see the same market behavior several times throughout the year and recognizing these periods can be just as important as knowing when the action is heating up.
But remember, these are lulls that are statistically likely to happen based on past events…It doesn’t necessarily mean they always will.
For example, June and July are typically lumped in with August due to the summer vacation season, but this year, the market was on fire during those months. Go figure!
If you add in the month of May, “Sell in May and go away” applies here too.
The adage comes from the idea that the market tends to underperform from April through October, so you might as well stop trading, go to the beach or somewhere else, and then return when the action heats up again.
Holiday Season: Mid-November to Early January
From mid-November through early January, the market slows down as we head into Thanksgiving, Christmas, and the New Year holidays.
During this time, you’ll see a lot of “holiday trading,” where the markets are open, but the real action is minimal. Like the summer months, trading volume drops as investors and traders prefer to focus more on holiday plans over trading.
But of course, just to keep us on our toes, the end of December often brings the “Santa Claus rally,” where the market tends to drift upward on light volume.
This can bring opportunities, but don’t expect big, sustained moves during the holidays.
Post-Earnings Drift: After Major Earnings Seasons
After companies report their quarterly results, the market can experience a hangover. The initial excitement fades, and the market can slow down until the next round of catalysts comes around.
You might see less volatility and fewer significant trends as the market digests the earnings data and waits for new information.
But Back to Our Current Situation…
The end of August is notorious for low trading volumes. Many institutional traders are on vacation, and the market tends to drift sideways.
But be careful because this can create a false sense of security. You might look at your charts and think the market is stable, but low volume can be deceptive.
If you’ve been trading for a while, you know this time of year can be frustrating. The lack of momentum makes it harder to find convincing trade setups.
But don’t let the slow pace tempt you to sit on the sidelines. Instead, use this time to refine your strategies, do your research, and prepare for what’s coming.
September: The Month of Reckoning?
Historically, September is one of the most volatile months of the year. It’s a time when the market wakes up from its summer hibernation and often gets hit with a reality check.
It could be economic data, earnings reports, or geopolitical events, September has a way of shaking things up.
This volatility is a double-edged sword…
On one hand, it presents opportunities to capitalize on big moves.
But on the other hand, it requires a certain level of discipline and risk management. If you’re not careful, September can quickly turn from a month of opportunity into a month you wished never happened.
How to Prepare
Tighten up your trading plan: If you don’t have a well-constructed trading plan, make one now…
Review and refresh: Review your trading journal, revisit your strategies, and make sure your risk management rules are rock solid. Paper trade the strategies you don’t have down pat.
And for swing traders: Consider whether your portfolio is positioned appropriately for a potentially volatile month.
If you’re a swing trader, you should check out IRIS, our proprietary AI-driven platform. I specifically designed it for swing trading.
Subscribers to the program get weekly analyst reports, training webinars, and best of all, access to the IRIS system itself. The tool operates much like ChatGPT to produce screeners, trading plans, and more.
But Don’t Give Up on August Just Yet
Short squeezes are always in play…They don’t care about an August cool-off.
And despite Monday’s doldrums, our setups are still working…
Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE) was a name on my Weekend Watchlist. The plan was to wait for a red to green candlestick pattern…
If you did wait for the pattern, you saw a very quick spike of about 10.83%* on Monday.
By the way, if you missed my Weekly Watchlist, check your email. I send it out every Sunday.
And last, but definitely not least, NVIDIA Corp (NASDAQ: NVDA) drops earnings after the bell today.
Honestly, I think you’d have to be living under a rock to not grasp how huge of an event that is!
The moral of the story: Monday was quiet and days like that are to be expected at this time of year… but there is still plenty of action to be had!
So be prepared, review your strategies and tune into my free live webinar tonight at 9 pm Eastern. I’ll go over what else I’m watching, all of my trading tips and tricks, and much more!
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade