Navigating the Choppy Market

by | Nov 18, 2021 | Market Lessons

What up?! Bryce here. 

It’s official … Matt can’t roast me for not being on Small Cap Recap anymore. I might’ve dropped the ball a bit last week, but now this is just getting ridiculous. 

Where’s my partner?!

Jokes aside, Matt’s brother, Mark Monaco, was kind enough to join me on the show this week. We broke down what’s going on in this mediocre market. It’s hard to find great setups currently…

Let’s go over the key points of our analysis. The stock market is an annoying chop-fest right now. Let’s make some sense of it.

Large and Mid Caps Lead the Way

If the show was called Large Cap Recap, we might have some more quality setups for you this week.

Medium- and large-sized companies are leading the market right now. This phenomenon is led by the huge move we’ve seen in EVs. Stocks like Lucid Group Inc. (NASDAQ: LCID) and Rivian Automotive Inc. (NASDAQ: RIVN) have been headed straight to the moon!

But keep in mind that these are BIG companies. They aren’t as straightforward to scalp (or swing) as a super-volatile small cap. 

It takes BILLIONS of dollars to really affect these stocks, and the percent moves tend to happen slower. You gotta have PATIENCE!

The Trickle-Down Effect

Small-cap traders, don’t worry. There’s a silver lining to what’s going on right now…

Market strength has a way of flowing down from large caps to small caps and then to OTCs.

The money usually trickles down from the most massive companies down into the microcaps we love to trade.

Look at the crazy run Elektros Inc. (OTCPK: ELEK) went on this week for what could be an early example of this.

Of course, there are no guarantees in the stock market. But if this trickle-down effect plays out as it has in the past, we should see some OTC runners in the next few weeks. 

Specifically, I’ll be watching out for OTC runners in the EV and energy sectors. These kinds of plays would be PERFECT following the recent strength of the larger EV companies.

Holding Longer

When large caps take over the market, it might be time to consider holding some positions longer than you normally would. This is simple logic…

If the moves take longer to play out, then you may need to hold your trade longer to get paid out.

I’ve been noticing this trend in my own trading over the past few days. Had I held a few trades longer, I would’ve banked harder…

If you’ve seen the same pattern before (and it’s worked out) — don’t lose confidence in the setup. Trust your gut and consider holding your position a bit longer than you normally would

Note: This doesn’t mean you should stubbornly hold a loser to prove a point. Use your best judgment!

Go through and study what’s working in the market recently. And remember that trading this chop will take a higher level of patience and DISCIPLINE to succeed. 

Until next week,

Bryce

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