Price action of Stock match the Market

[NickAbrams 11]

Several people in the chat today pointed out that several stocks in play had price action that were very similar to the price action of the Market.  Correct me if I'm wrong, Robert H. responded with an explanation of "the stocks were trading with the Market".   What is the best course of action for when this happens? Can you trade like normal or can you even use it to my advantage? Like Short when the market is weak?  What kind of strategies do you guys have under these circumstances?  Are there any interesting behaviors stock's have when under these conditions?  There's a lot to learn.  Any input in appreciated.  Thanks.

Edited October 8, 2018 by NickAbrams

[Brendon 146]

Hey Nick,

I will drive into what Rob H. said in chat. When the market has serious momentum in one direction or is volatile it tends to push other stocks around, now this is not always the case. But when that does happen the stock is no longer in play and trading independently. You have to use extreme caution if you decide to trade stocks that follow the overall market. They are susceptible to erratic swings due to any type of press releases throughout the day (i.e Trump burps). So keep MSNBC on in the bg. A strat to use, really the only one I can think of is paying close attention to historic and intra-day price levels on the SPY or whichever indices the stock is following...and scalping. You can definitely trade them but don't overstay your welcome. Some of the time a stock will run towards it's own significant level that syncs with the market, say a 50sma daily with the stock, and a 20ema with the SPY, that can happen. Keep those charts up and glances your eyes back and worth. More or less double the work and riskier by nature.

 

-B.

[NickAbrams 11]

Thanks for sharing your knowledge Brendon.  I haven't been looking at the INDU$ charts enough! That will be great going forward.  There's a lot to know.