I’ll be honest, I was feeling FOMO (fear of missing out) last week and this week. Numerous stocks were popping from earnings reports, which is a whole different article, and stocks like AAPL just kept grinding upwards. I had several subscribers ask me my opinion about AAPL and where it was going to go. I had expressed caution about its ascent since I could see it only had strength on a lower time frame like the 15 minutes. This is all fine and dandy as long as that held, but the longer this move went on the more drastic the unwinding would be when it finally breaks.
In this screenshot of AAPL, the magenta line is the 50 SMA which is the primary moving average I use as a guide. The right side is the 15 minute and the left side is the hourly. Do you see how price in the hourly chart has been far away from the 50 SMA for several days? That is unsupported. Now take a look at the 15 minute chart and you will see that price even pulled away from that 50 SMA.
While this is great and exciting if you are long, which was also causing me the FOMO, I knew that this wasn’t going to end well due to the unsupported structure of price on both timeframes. Therefore I had to stick to what I knew (which was that there wasn’t a low-risk entry for me) and prepare subscribers for a trap door.
The solid lesson I was able to take away from the last five days is that when you are feeling the FOMO most, it’s probably the worst place to try to get in. I was able to recognize this emotion in me and tamped it down, sticking to the technical rules that have served me well in the past. By the conclusion of today’s market, with the drastic drawdown, I finally had the reward for staying true to my process and passing on the FOMO: AAPL went straight down in 1.5 days to fill that void between price and the hourly 50 SMA.
