Fly Fishing the Stock Market: How to Search for, Catch, and Net the Market's Best Trades

CONCLUSION

When armed with effective forecasting tools such as the Weathervane and Weather Station, traders can acquire the ability to get in sync with the market seasons. Both long- and short-term market direction becomes clearer, along with greater insight into the length of bull or bear runs. Ultimately, this helps us identify approaching turning points that can ensure optimal entry and exit timing for our trades. Granted, individual stocks don't always correlate to the performance of the broad market. But if you are hoping that a reversal will develop to rescue your trade position, it helps to have the overall influence of a market reversal behind your back. Many traders fail by trying to jump the gun and enter trades too early before confirmed reversal signals appear. Trying to catch such a “falling knife” can inflict great harm. Though bloodied hands may heal, account values often don't. These tools help traders avoid that common mistake.

Finally, I never invest the time and effort to go fishing until I have first identified the fishing season and checked the weather forecast. Likewise, I don't invest hard-earned money until I have identified the market's season and short-term forecast using the tools explained in this chapter.

Invaluable is the ability to pinpoint seasonal market changes. A trader who discovers this is miles ahead of the competition. Just as fishing in the right season with a matching fly pattern yields trophy trout, so too will the trader find trophy-quality ...