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Tony Roylance
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I am a St. Louis-based independent and fee-only Registered Investment Advisor (RIA). My passion is market research and strategy development. I look forward to talking with other investors and traders. I am always up for a chat about the market, feel free to contact me at... More
My company:
MCR Capital Management
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MCR Capital Management
  • Small Caps At A Buy Point 0 comments
    Dec 12, 2013 9:22 AM | about stocks: IWM

    As I mentioned in previous posts/articles a good trader, like a skilled hunter "waits for the shot". In this case, we were waiting for a more acceptable risk/reward level. In my (and other very famous traders) opinion, the way to make money in the markets is buying short-term weakness on long-term strength. There are 2 locations that have a favorable risk/reward ratio when adding to positions. One of them is the 50 day moving average. Yesterday, the Russell 2000 reached that major level of support. Those of you who felt like they missed out on some of the run, and I told you not to worry, now is when you should think about pulling the trigger. Not aggressively, you phase in to your appropriate asset allocation level.

    Since we are at a critical junture, you must quickly reload, because market action like we saw yesterday occurs twice (in my research). It occurs near a top at the beginning of a correction (which is where we are at right now), and again at the bottom of a correction. If you invest right now, you must set a mental stop say 5-8% below this level, and you must obey it.

    (click to enlarge)

    Again, I don't predict the markets or forecast, I follow market action. Some of you who were waiting for a buypoint, we have one right now, but we must remain cautious at all times. The billionaire trader Paul Tudor Jones said that once he gets into a position, he thinks about everything that could possibly go wrong and plans for it. That's what we are doing.

    Good Luck Trading!

    Tony Roylance

    401ktactical.com

    Disclosure: I am long IWM, MDY, SPY.

    Stocks: IWM
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