Mark Twain Didn't Trade Stocks

Samuel Clemens famously said, “History doesn’t repeat, but it often rhymes.” Clearly Mark Twain didn’t trade stocks.

Time and again when a market rally begins I hear the same thing from traders. “I can’t believe how strong the buying is. I can’t believe there is barely any retracement. Sellers have all but disappeared.”

After seeing this type of behavior in action a few times traders should get the message. This is why you need to be on board stocks that are best positioned for major advances when an uptrending market that has paused for a mild correction confirms a significant turn.

We got that turn last Monday and mentioned it on this page. It didn’t have to lead to a big move, but after undercutting the recent lows on the major indices and stubbornly refusing to go lower it paid to take longs in top performing stocks, many of which we profiled in our sister blog. They were low risk entries last week. Since that time many of them have wracked up attractive gains.

Are we due for a “correction.” If by a correction you mean a down day for stocks the answer is yes. But remember that early in a rally bad days tend to be isolated. This might sound familiar to those who follow my commentary on Briefing.com but you rarely get two down days in a row. Unless earnings reports of market moving companies become disastrous, and early results suggest they will not, look at a brief pullback whenever it comes as a buying opportunity.