Hey Guys,
The market went up overnight but it retreated this morning. The S&P 500 is around 3,880.
Tomorrow the Fed is going to announce the results of its FOMC meeting decision and it could have a major impact on the market in either direction. There might be some major volatility in store for us.
My SON position reached its profit target this morning. And there's something worth pointing out on that one.
SON got bad news yesterday. An analyst downgraded it. I bought it anyway (after it had dropped noticeably in price).
I get asked a lot why I don't consider the news when I make trades, and that SON trade is a good example of why. Sometimes a stock doesn't go in the direction that intuition might suggest it would go. I've seen so many cases where a stock (or the market) gets news and it moves in a direction that is opposite of the sentiment of the news.
I simply lean on the back-tested approach instead. I don't try to guess how the news will impact a stock price. When I run back tests of trading strategies, they encompass all these various types of news-related events since I typically run them across 20 years. The news is already baked into the back tests. The back-tested trading strategy doesn't filter trades based on news, and therefore neither do I. My goal is to stay in lock step with the back test, and that's why I take every trade that meets the criteria regardless of the news.
And that explains why I took the SON trade even though an analyst downgraded the stock earlier that morning. And this time it worked out and I profited from that decision.
I picked up two new stocks in the low-priced account this morning: CVI and KMT. Both released earnings overnight and are all over the place pricewise this morning.
If you have any questions or feedback, I'd love to hear from you.