In Trader's Market, Shorten Time Frames, Hedge. Take Profits Early

This time is different as we are living in a new world where the stock market is more like Texas weather than a vehicle for price discovery and investing, writes Dr. Joe Duarte. Applied Materials (NASDAQ:) and Micron Technology (NASDAQ:) are moving higher and may gather some steam.

Volatility is certainly here to stay as the traveled over 1300 points on a closing basis in a mere two trading sessions last week. For those who slept through the spectacular events, things started to unravel when Apple (NASDAQ:) delivered a stark warning about its upcoming quarterly results on January 3. The market promptly crashed and burned delivering a 600-point decline putting the bears in “I told you so” heaven.

On January 4, a huge beat on the new jobs section of the monthly Employment report and a cordial sounding Fed Chairman Powell who noted that the central bank was going “to adjust policy quickly and flexibly” combined to kick start what seemed to be a dead cat bounce which turned into a real stock rally, at least for a day.

That was then

No matter what they say, this market now trades one day at a time, sometimes one headline at a time, making it difficult for anyone who has even a few days for a trading time frame.

What does it all mean? Well for one thing, the Fed admitted that it’s willing to pause on its path toward more rate increases for a period of time. So, for a day that was good news. Of course, Powell’s remarks don’t necessarily mean that the Fed will stop raising interest rates altogether, but it does suggest that the Fed may know something about a bank or two that may be in some trouble and they are hoping to keep things from

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