To be successful in today’s market, it all comes down to understanding that you must “Invest in what you see, not what you think, hear or fear.”

This means turning off the TV and staying focused on understanding what kind of chart patterns make for successful investments and to have the confidence to pull the strings when they trigger.

For us, we look at three types of chart patterns:

• Uptrend patterns
• Downtrend patterns
• Changes In Trends patterns

And that’s all we look for. We don’t care what any analyst said about a stock, what Cramer had to say in last night’s Lightning Round or if we didn’t like the service we got at this company’s store. None of that matters. All that matters is what the chart is telling us and what we do as a result. The chart patterns that lead to significant gains are the same whether you are a trader or an investor.

It’s a Market of Stocks, Not a Stock Market

How do you make money consistently month over month regardless of market direction? How do you make money being long when the market had the kind of year it had in 2008, which featured some of the worst months the market has had since the 1930’s?

The answer is simple. It’s a market of stocks, not a stock market. You want to get to the point where market direction shouldn’t matter. All that matters is finding stocks that have completed set-ups ideal for significant gains and doing what the chart tells you to do.

Even in the most raging bull market, a sector or two may suddenly fall out of favor and then we’ll start seeing topping signs on the charts of the industry’s leading stocks. This means it’s time to go short — even though the overall market is going up.

What Can We Expect This Week?

Going into the week, we’ve got a lot of cross currents. We can build a case for the market continuing higher and we can build a case for the market going lower.

Month to date for the most part the Dow Industrials have been range bound.

One element that gives us pause for continued upside in the short term from here is the making of a potential Head and Shoulders Top brewing as shown above (with the blue line being the neckline.)

The pink line is important by the way– it’s the whole uptrend line off the March lows. As you can see it’s broken it and is currently backtesting. That’s a negative for the long side of the equation as shown below…

A break of the neckline to the downside sets the ball rolling or a potential retracement to the 7500 level as that is where the 38.2% fibonacci retracement and the 50-day moving average levels are.

Should we not be able to break 7750 to the downside, well then that would be construed as a sideways consolidation.

In summary: If the market wants to continue higher — we’ve got names on the long side of our watch list to work with.  If the market wants to break lower — we’ve got names on the short-sell side of our watch list to work with.  So remember:

It doesn’t matter if the market goes up or down.  We trade what we see, not think, hear or fear.

Sincerely,
David Grandey

Source: Why It Doesn’t Matter if the Market Goes Up or Down