Here’s the Right Way to Look at These Rallies and Selloffs
by Brandon Chapman, CMT

Let’s say an athlete ties a record that’s stood untested for 20 years. Is the performance a fluke or one-off? Or is it a sign that the record might fall soon, that something bigger is coming down the road?

What’s the proper perspective?

With the market wracked by uncertainty, that’s the question in front of traders right now.

Over the past couple of months, it’s been difficult to gauge the direction and magnitude of market moves.

Any given Tuesday’s mild selloff could become Friday’s all-out 10% rout… or Friday could bring another run at record highs. Yes, the top in February was pretty well telegraphed, but what no one knew at the time was whether the selloff would be 5% or 20%.

The worst position you can be in right now is thinking that you know what is about to happen. Staying one one side of the market may prove disastrous – unless you get the direction and magnitude right.

Tonight, we’ll look at how we can get it right without risking too much one way or another…