The Tides

There is a saying that "a rising tide lifts all boats." Well, in my experience, this saying seems to be generally true of the stock market. Therefore, it is important to know where the general market is trending before you execute your strategy.

I enjoy boating and being near the water so if you don't mind I'll be using the tide terms as an indicator of where I think the market at different moments. For the purposes of 10KTrades, the overall market is considered "the tide" and each individual stock lot is a vessel or "boat".

Here are the Trading Tide Level definitions as used in this blog:
  • Low Tide: The lowest level of the tide. A long term indicator and sometimes a good time to buy stocks.
  • High Tide: The highest level of the tide. A long term indicator and sometimes a good time to sell stocks.
  • King Tide: One of the highest or lowest tides of the year.
  • Neap Tide: A smaller difference between high and low tides and is a short term (almost daily) indicator of volatility (VIX). Neap Tides occur naturally on a lunar schedule but, for the purpose as used in 10KTrades, are not on a predictable schedule. A Neap Tide happens during periods of low volatility (VIX) and sometimes presents a good time to hold or sell stocks as there is possible stability in the market during Neap Tides.
  • Spring Tide: A greater difference between high and low tides and a short term (almost daily) indicator of volatility (VIX). Spring Tides occur naturally on a lunar schedule but, for the purpose as used in 10KTrades, are not on a predictable schedule. A Spring Tide happens during periods of high volatility (VIX) and sometimes presents a good time to buy stocks after big sell offs. But watch out for further instability which can be dangerous!
  • Rip Tide: A strong flow either way. Rip Tides happen when there is news or earning about a stock, or political or economic unrest. During a Rip Tide a stock can move violently in one direction or another.
At the time of this post we were at a high long term tide and a short term neap tide. I'm not overly excited about buying stocks in this environment and will stay on the sideline except for some selling.

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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not recommend, advocate or endorse any third-party links, resources or advertisements of any kind. Any investment decisions are recommended to be in conjunction with a Certified Financial Planner, a comprehensive and personal financial plan and all other components that make up your own financial situation.

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