Managing Trade Expectations

US markets were closed on Monday and the markets started as a damp squid when opening, so I logged in to a few briefings from money managers who shared their investment allocation and outlook for 2021, states Ian Murphy of MurphyTrading.com.

Several themes were common: stay long US equities while rotating from growth (tech) to value (financials and industrials) with a preference for dividend payers. A weaker dollar is expected with commodities, emerging markets, and European stocks seen gaining as a result.

While these calls can be informative, active trading is located at the opposite end of the market spectrum. Our themes for the year ahead are the same as always, stick to our strategies and take the triggers when they occur. Some of us will cycle through lists of stocks looking for set ups, others will churn trades on the same instrument repeatedly—many of us will do both.

The most important thing is to follow the strategy correctly and not to expect or anticipate a preferred outcome. If the strategy is profitable the results will look after themselves.

This day last week, I shared a Diesel setup on Norwegian Cruise Line (NCLH). The trigger bar was not as deep a washout as hoped for but based on an entry at the close of $24.61, the initial stop is still at $23.18 and the first target has been hit (see Data Tips window).

February 4 was the expected earnings date when I looked it up last week, it’s now tentative for February 18 (insert in red box), a reminder that we need to monitor this until it’s confirmed. This is a daily swing trade strategy, so we should close the position before earnings or at least scale out ⅔ before then if we prefer an aggressive approach.

Learn more about Ian Murphy at MurphyTrading.com.