Dear Traders,
Friday was a tough day.
The market sold off sharply, especially technology and AI-related stocks. The Nasdaq lost more than 2% in a single session and roughly 4.5% for the week, while the S&P 500 finished the week down nearly 2%. Both recorded their worst week since June.
I know how it feels to watch your positions turn red, see a promising setup fall apart, and start wondering, “Am I doing something wrong?”
I feel that frustration too. Even when you accept that losses are part of trading, it can still be exhausting to stay disciplined when clean momentum is hard to find and progress keeps getting interrupted. This year has felt difficult, and I know many of you feel the same way.
As of this week, we are 100% cash. As you already know, I took only one trade all week, and I plan to stay defensive until I see a meaningful improvement in market conditions.
I’m comfortable waiting. I don’t need to have a position just to feel like I’m making progress.
Right now, I don’t believe we should be buying breakouts in this environment. If I decide to take any risk, my preference is for carefully selected pullbacks, with entries closer to support, clearly defined exits, smaller positions, and realistic expectations.
Patience is a big part of this business. Sometimes that means sitting through a slow period, watching other people trade, and accepting that protecting your capital is enough for now.
Better days will come. I can’t tell you whether that will happen next week or further down the road. My priority is to preserve both our capital and the confidence we’ll need when conditions improve.
If this week hit you hard, take a breath. Give yourself some space before making your next decision. You don’t have to make everything back immediately. Come back to your plan, your risk limits, and the process you can repeat over the long term.
In this edition, I’ll walk you through a few interesting pullback candidates that fit the mean-reversion framework I’ve recently been testing in RealTest.
As I shared earlier, the strategy uses a z-score to identify unusually stretched conditions and look for a potential move back toward the average.
That backtest produced more than $1 million in net profits across 213 trades with a maximum drawdown of 33%.
The opportunities below fit that research framework. They are candidates to evaluate, and any trade I take will still need a clear entry, a defined exit, and a position size I’m comfortable risking.
For now, I’m staying patient, keeping risk small, and letting the market show me when it’s time to become more active.
To see exactly when I buy and what I sell in real time, join the private Discord server. (*available only to PRO members)
This is my performance from previous years.
Copy my complete strategy and start trading these high-probability trades here:
High Probability Trades
Of all the tickers on my watchlist, these are my high-probability trades for the coming week.