Happy Memorial Day weekend, and thank you to all of you who have served or have family members who have served to protect our great nation. After our Memorial Day break a few things will happen that can wreak havoc on traders’ accounts, but it doesn’t have to happen to you.

The first thing that trips up traders is they believe the media’s constant theme of how the summer trading is ‘difficult and different’. This gives them a psychological crutch to blame losses on the market. Don’t do it. The market is constantly shifting its personality from the likes of strongly trending, quiet and trendless, volatile and trendless, slowly trending, etc. Any of these personalities can exist in any season, so if you focus on the fact that it is ‘summer’ to explain the market it is counter productive. Focus on the charts, not the season.

To make matters worse, summer seems to have a reputation for being a tough time to trade. The common complaints are that it’s trendless, choppy and/or has light volume. I’ll agree that volume tends to decline, but the assumption that light volume or the summer season will always result it a trendless or choppy market is not true.

All too often I’ve listened to media describe a beautifully trending market as low volume chop because they can’t see beyond a day or two of price action. These same market conditions are prefect for enjoying swing trades that don’t give you any anxiety of positions having big swings against you, because they are quietly going your way. Furthermore, trendless, choppy markets are also filled with opportunity once you decide that they are not difficult summer conditions. A second reason traders get tripped up in the summer is because they get lazy.

If the word lazy offends you then let’s say ‘distracted’. When traders are distracted they break their trading rules, change their trading habits (i.e. don’t look at the market action as closely), or worse take risks they would not normally accept. Why would anyone do this? Because is its summer.

I’ll gladly put myself in this camp, and Memorial Day is my mental cue to recognize this pattern is now in effect. As a result, it’s time to shift my trading to ‘summer mode’. My summer mode trading is not a big shift tactically, but it’s an important mental one.

What’s my summer mode trading? First, focus on my first point of this article – the markets are not tougher because it’s summer. Identify the market’s personality and trade it accordingly. Second, if I’m going to be distracted (i.e. spend more time away from the computer during the day, go on a vacation, etc.) then I plan my positions accordingly. Third, have more patience with both your entries and exits. Unless you’re day trading, you’re likely to trade better if shift your mindset to be in alignment with the season which is typically to ‘slow down’. Wait for the right trade which may take longer to find if you’re distracted.

While I don’t believe the charts are any tougher in the summer, the news flow, the volume, the media all do shift into a summer / holiday like mode. Embrace it. You’ve probably heard the phrase – ‘don’t fight the Fed’. Well, don’t fight the summer. Enjoy it. I hope this helps kick your summer off to a good start.

S&P 500 (SPY) Consolidation, inside day. The only overhead resistance is the 242.08 high from Thursday. First support is still 240.70 then 240, around 237.70, and then 236.50 before you get to the weekly low of 235.40 If that breaks watch out below with support at 233.50 and then 225.

Russell 2000 (IWM) Weak relative performance again, but held 137. Resistance at 138.60, 139.00-139.50 Look for support about 136.80-137, but if it breaks below 136.35 it may be headed back down.

Dow (DIA) Inside day. A close over ATH at 211.50 would confirm upside. 205.85 is the weekly support and if that breaks then it should find support around 204. If it breaks 204 the next support level is 194 on monthly charts

Nasdaq (QQQ) Inside day. Important support at 135.80 and if broken look for next support at 133.70

KRE (Regional Banks) Weak again. This sector is one of the weakest and still in trouble in a bear phase There’s a lot of resistance at 54-55. The big support to hold is 51.50

SMH (Semiconductors) Yet another new high and closing high in this leading sector. Should find support at 84. A good buy area at or above this level, but needs to hold 81.44. If it can’t, next support at 79.60.

IYT (Transportation) One to watch next week. Consolidation day today, right nuder key resistance level of 165.75.Needs to hold 163.

IBB (Biotechnology) Heavy today but still stuck in a range of 295-287. Big support above 200 DMA at 286-287.

XRT (Retail) Despite several big movers to the upside in retail stocks this remains under pressure.  It needs a flush and reversal pattern to think about any serious long play. Or a move above 43.Long-term pattern on weekly pattern looks heavy with support at 38 at 80 month moving average.

IYR (Real Estate) bearish resistance at 80.40. Should find support around 79.

XLU: Consolidation day after nice bullish move this week with a breakout from compression A healthy pullback will find support at53.00-52.80. More support at breakout level 52-52.25

GLD (Gold Trust) Closed over big number of 120. Will look interesting if it breaks today’s high of 120.79. Should find support at 120 now. Breakdown and close under low at 118.50 could mean a lot more pressure to downside to follow.

SLV (Silver) Coiling at 1 and 6-month calendar range highs. A move above 16.35-.50 resistance could lead to a nice pop.

GDX (Gold Miners) Still waiting for a break over the 200 DMA and 6-month calendar range of 23.90 to get long. A break below 21 could get ugly to downside