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Summer- Time for a Much Needed Rest?

Writer's picture: T. LivingstonT. Livingston

Updated: Nov 16, 2021


At the end of each week, I like to look at some weekly charts to get a broad view of the market action. The past three months has seen some fantastic action on many stocks and on the Nasdaq 100. Tesla ($TSLA), CrowdStrike ($CRWD), Zoom ($ZM), Draft Kings ($DKNG), Spotify ($SPOT), and Nikola ($NKLA) are just some of the stocks that have doubled during that time.


Market favorites Apple ($AAPL), Microsoft ($MSFT), and Amazon ($AMZN) have also gone large runs.


When looking at these stocks and the Nasdaq 100, it appears like a period of consolidation or basing is needed and likely. This is something that is to be expected after a long period of gains. In addition, the summer months are usually weaker for the stock market than winter season (November to February). If the market pulls back, new bases will be built offering the opportunity for new entry points.

Remember, the market can pull back sharply as it did in March or it can consolidate calmly through sideways action as major moving averages catch up. Just as a runner needs to rest, the market cannot sprint forever. Periods of rest are both needed and a springboard for future gains.

The key is to not get overly bullish just because the stock market has been strong the past three months. I've encountered quite a few new traders who have made serious money over the past three months. It's always unwise to confuse genius with a bull market. The key is to think from a long-term perspective, realizing this is just a season and discipline and good trading go hand and hand. There is no need to force any trades. There's no need to worry about missing out. The market will always be there. However, traders who don't have the discipline to wait for proper entry points won't be.



Patience is a virtue in life and in the stock market. If you are sitting in some big winners with proper position sizing and excellent entry points, you will be able to calmly sit through pullbacks without having to worry. If you didn't have your position size in check or bought extended stocks, these pullbacks will seem anything but ordinary.

With some nice gains, I'm content to sit through some normal pullbacks as long as my stop losses aren't hit, but I feel no pressure at all to add positions in extended stocks. Some time away from the computer screen never hurt anyone.


Disclaimer: This information is issued solely for informational and educational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. None of the information contained in this post constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. From time to time, the content creator or its affiliates may hold positions or other interests in securities mentioned in this blog or the associated Twitter and Instagram feeds. The stock or stocks presented are not to be considered a recommendation to buy any stock or stocks. This material does not take into account your particular investment objectives. Investors should consult their own financial or investment adviser before trading or acting upon any information provided. Past performance is not indicative of future results.

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Hypothetical Performance Disclosure: Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.

Risk Disclosure: Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

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