Let’s dig into the charts first and then talk some about fear based trading.

SPX Review & Outlook

SPX put in another new all-time high this week, but the move wasn’t explosive. We’re still holding above all key moving averages, and the uptrend structure is intact. We’ve had a mixed bag of reactions to earnings, but I did have some of the stocks on my list rack up points like ACHR, RMBS, AEHR, COIN, and CRSP. If the market chooses to really breakout of this sideways, there are a lot of stocks that have been setting up like AXP, CVNA, DAVE, DKNG, DE, META, as well as some up and coming ones like NFLX that shaved a good bit of points off after their earnings announcement.

This is definitely the season where some names do well while others are stagnant or indecisive. But, when the stocks decide to go, the movement can be ideal for swing trades.

We’re still riding that uptrend line from April. We dipped below it on Wednesday and then grinded higher along it for the rest of the week. We are sitting on top of the shelf I mentioned last week, so now we want to look for clues to see if this area will support the index or be a place of digestion or decline.

A few things I’m watching:

• The uptrend line from the April low. We’re right on it. If we lose this line and the 10EMA together, that’s the first sign of potential change in character.

• The support level of 6,232 is still my first level of interest, with a wider support zone down to 6,123.

• The 20EMA that is currently around 6,200. A pullback into this area would still be healthy and well within trend.

• Continuation scenario: If we break above 6,313 and hold, we could get another leg up.

I’m still cautiously bullish and just letting each individual stock do its thing.

PYPL Analysis

That big red candle last Friday that knocked me out of my position is currently looking just like a retest to the 50SMA and possibly the bottom of this base. PYPL went a bit sideways early in the week but then pushed higher, and now it’s right back at the top of the range (the range being my shaded box around 70.89 to 74.13).

There’s some resistance overhead, with 75.16 marking a recent high from mid-June, and then just above that is the 200 SMA. It’s pushing into that zone now, but I didn’t re-enter. Friday would’ve been a fine entry, but I already had other positions on, so I sat it out.

For now, I’m just watching. If it can get over the 200SMA and actually hold that area, which also lines up with the weekly 50SMA, I’ll consider taking another look. Until then, let’s just continue to analyze the structure that is unfolding.

Alright! We have made it to a topic that has been on my mind since a few trade reviews I did for some of my inner circle. It reminds me of this adage: scared money don’t make money, and in this context (exiting early from fear), it definitely holds true.

Fearful Trading

One of the most challenging things in trading is being able to give your trade time to work. Experiencing loss after loss, or inconsistent results can really make you jumpy when managing a position you’re in. If you don’t give your trades room to breathe, you will never actually see what your setups are capable of. 

For example, if you are trading the daily chart time frame, you’ve got to let the daily structure form and let the daily chart show you that the move is over. This means giving more space, more time, and building endurance for the fluctuations. If you are out the second you get one red day and none of your exit criteria is met, this is not managing risk, it’s managing your discomfort. It also means you probably aren’t really trading the daily chart time frame, but using a smaller chart as your trade chart. I trade the daily chart time frame, and use a smaller time frame (the hourly) to get into a trade, but the decision to get into and out of a position is based on what the daily chart tells me.

Your exits should be set way before you even enter a trade. They should be based on key levels and structure. If your exits aren’t set, you are more prone to leave a trade based on discomfort instead of invalidation. You cannot grow your confidence (and profits) until you start letting your setups actually play out. Stops are meant to protect you after the setup fails, not protect your discomfort. 

Building endurance takes practice. You can’t will yourself into being less afraid, but you can build endurance by getting more grounded in structure and learning to trust your charts and yourself. Here are a few things that help me stay grounded:

1. Studying my charts.
   A stock’s movement can be studied several ways. TradingView’s replay feature allows me to easily practice trade using historical data. I also let the replay run and sit back and just observe how price action unfolds. Another way I study is by going straight to periods of rest and rise and detail out what a stock does before it breaks out or after it pulls back. I note all the nuances like what the moving averages and volume are doing at the time. All of these things help me get better attuned to the natural rhythm of a stock.
   

2. Planning my trades.

   My charts are marked up before I even consider getting into a trade. Knowing where to expect potential support or resistance, and where my trade may be invalidated is crucial to know before hitting enter. I also write out potential scenarios. For example “Price may test this level and bounce.” or “If it dips below but reclaims, I’ll hold.” Pre-playing these scenarios help me stay calm when things aren’t going in my direction.
   

3. Digging deeper.
   The last thing I want to mention is the mindset piece. There’s usually something deeper driving the impulse to exit early (or overtrade, or enter early, or go against your plan, etc etc). Diving into the underlyings can help heal the parts that trigger the action.

Here are some journal prompts to explore the psychological aspect of fearful trading. Take a few minutes to reflect on these, not to judge yourself, but to get curious. The more awareness you build around your patterns, the more control you’ll have in the moment.

• What am I really afraid will happen if I stay in this trade?
  (Is it losing money? Being wrong? Feeling stupid? Repeating a past mistake?)

• When I think about taking a loss, what thoughts come up?
  (Does it feel like failure? Does it remind me of something outside of trading?)

• What’s my relationship with being wrong?
  (Do I give myself grace, or do I immediately feel ashamed or judged?)

• Where did I first learn that losing is dangerous or unacceptable?
  (Did I grow up around criticism? Was I expected to always succeed?)

• When I exited a trade early, what was I hoping to avoid?
  (Regret? Panic? Disappointment? A sense of helplessness?)

• Do I trust myself to manage a trade once I’m in it? Why or why not?

• What do I believe a ‘good trader’ would do, and how does that pressure me?
  (Do I think they always stay calm? Always nail the perfect entry and exit?)

• Am I confusing discomfort with danger?
  (Is this a true breakdown, or just a moment of uncertainty I don’t want to sit with?)

• What would it feel like to hold a position through discomfort—and still win?
  (What might that change in how I see myself?)

There is a lot of back work that goes into trading and trading well. And I think that this sometimes gets lost because of the money you can make in a way that feels “instant”. The study and practice needed to do this well is full time. I don’t say it to deter anyone…well yes I do 😂. I always tell people who are new and want to learn this skill set, that you have to really love the work part of it. Because if you don’t, you will never be successful in this space. And the work part is daily study, review, charting, and constantly evolving as an individual mentally, emotionally, and even spiritually. It’s all worth it imo, because the journey is so fulfilling!

Anyways, just remember that one red candle on the daily chart isn’t a failed trade. One shaky hour isn’t a reversal. And one uncomfortable moment doesn’t mean you’re doing it wrong. If you’re trying to build real endurance in your trading, you have to shift from managing your feelings about the trade to managing the trade itself.

Let your trades work! The ability to hold through discomfort without abandoning your plan is one of the most valuable skills you can build. This is where your edge lives.

Til next time!