This continues to be an environment that I believe favors active traders. As I wrote over the weekend, the market is in something of a chop zone where news can become a factor, as was the case this morning when the market gapped down on news that White House Chief Economic Adviser Gary Cohn was resigning. This creates opportunities for enterprising investors who use the volatility to their advantage, rather than chasing strength and thereby becoming a victim of the volatility.
The ultimate illustration of an opportunistic approach was embodied in my Monday morning blog post where I discussed buying Caterpillar (CAT) and Deere & Company (DE) off their lows as they were testing and undercutting prior lows in what may be potential new bases. Since the charts look almost exactly the same, I can use CAT to illustrate what I was looking at and my corresponding approach in taking these trades.
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