If the advantage of #OTCSET plays is the extra level of confidence and conviction you can have when a secular trend is on the bulls’ side, or at minimum isn’t working blatantly against them, then the disadvantage or risk to them is the other side of that same coin.
Having too much conviction and confidence can get you in a lot of trouble in the markets. Even in the event that you’re correct about a bigger picture belief, your timing may be so off that it almost doesn’t matter if you’re right about the bigger picture. So with that in mind, the biggest risk in a SET play is being so married to a bullish narrative that you convince yourself that something is happening on your watch – when you believe it should happen and not when the market ultimately decides it will happen. Being right but too early is often just as bad as being dead wrong.
A strong bullish monthly chart can have so much wiggle room to spare while continuing to stay above it’s support and/or moving averages and maintaining a secular uptrend that a healthy correction on that scale can be a chart wrecking correction on the shorter time frames, ie daily and weekly charts. Stare too closely at the daily chart trends and you’ll miss the big picture trends which is the key to the SET pattern. Stare too closely at the bigger picture and the short term action will eat you alive if you’re not ready for lots of counter-trend shenanigans. I can’t stress it enough, though I think there are huge opportunities here, it’s not likely to be a quick or easy path to realize the potential.
If you notice, all of my charts on this site date back 20 years and are monthly charts. Ultimately I’m banking on the long term bullish tail winds to win out on many of these secular trends, but think about the scope we’re looking at. A daily chart may look like it’s certainly about to breakout, and it may, but that doesn’t mean that the weekly and monthly charts are ready to rock too. On the flip side, a monthly chart might look primed and ready but even just being a few candles off on your timing can send your emotions for a whirlwind. A healthy consolidation or basing period on the monthly chart can be a long time and quite volatile when looking at the day to day action.
If you’re banking on a setup on the daily chart to spill over into a secular breakout on the monthly chart, you might be many months too early (if you’re even correct about that secular breakout). So in that regard, if you over-commit at the wrong time you’re going to get your capital locked into plays that otherwise just may not be ready to make the move you think they’re going to make. Keep this in mind depending on your goals, expectations as well as your willingness to be patient with any of these SET plays.
Depending on how you choose to play something you may elect not to take any profits into a runner because of your big picture bullish bias, only to watch the stock settle back down and have your unrealized gains slip away while you’re back in waiting mode. Just because I believe we’re looking at unprecedented bullish conditions and opportunities in the OTC for the coming months and possibly years doesn’t mean the upside will necessarily be quick and easy. Plan for an all out war and be ready to have your conviction tested. If you believe strongly in the chart and fundamentals of a SET play and the MMs or other traders are fading the monthly chart strength with counter-trend price action, it’s worth considering using the weakness as a buying opportunity.
No matter how much you like any of these SET plays, don’t over-commit to them prematurely. Don’t chase short term strength thinking this is the big one. There’s been a lot of damage done since the 2021 highs, which means lots of sentiment still needs to be reversed and lots of historical resistance needs to be churned through to reach the prior peaks. Scaling in during lulls or dips and then taking some profits off into the rips while leaving a core position is a good general game plan. There’s no one way to do this and certainly there’s an element of luck that will be involved – especially with timing. Ultimately your game plan is your game plan. If you go all or heavily in on any of these SET plays hoping for your Deep Fucking Value play of the OTC, more power to you, but don’t be surprised if the road to getting there takes a lot longer and is a lot bumpier than your optimistic side wants to believe. As much as I’m stressing the potential opportunities here is as much as I’m stressing the potential risks and pitfalls. Trade accordingly.