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...Traders do not get married to their stocks, nor to a particular view of the market. For the past few weeks we have maintained a bearish outlook on the market and this has coloured the way we have approached trading opportunities. In the sample trades, such as SRO, discussed below, this has meant defensive approaches which have been successful. It has also meant that some trading opportunities have been entered less aggressively with a closer eye on the potential risk. Our bearish outlook has encouraged two approaches. The first is tactics to lock in profits. The second is an insistence of stronger buy signals before entering into trades. This includes multiple confirmation form a variety of signals based on price, volume and trend behaviour. The bearish outlook doesn't mean we stop trading or stop making profits.
The bearish outlook was based mainly on a statistical basis. The market generally falls in July and again in August so this puts the balance of probability in our favour. With the market making new highs traders need to consider the nature of this activity closely. Is this really a well supported new trend, or is it just a fake? The answer determines who we choose to participate in the up trend. A strongly supported up trend widens the selection of stocks. Because the up trend is well supported we can ride out minor trend retracements. A poorly supported up trend suggests we should watch just the strong performers and be prepared to sell out quickly if the up trend weakness....

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