The breakout into new high ground on the Nasdaq was clearly a fake out or a Bull Trap. I know many traders that bought into this and spoke about a Super Bull Cycle. Maybe they will be right however my game plan is defense. With China down 8% in one day, volatility like that can chew up a portfolio rather quickly.
On our US Markets…major supports are close to being violated. Trend lines from 2009 and key moving averages. The SPX closed just above it’s 200dma while the COMPQ broke below it’s 50dma. The market is looking inherently weak. Bull markets do not last forever. Just the hope of non experienced investors. They hope the prices they paid for stocks will come back….
I would not suggest trying to go short the market as there have been many rebounds when it looked like things would really get going on the downside. The sidelines are fine for me right now.
I hope you have a trading plan to stay out of BIG trouble…
As I am writing this China stock market was down something like 8% today. It is hard for me not to think this will effect the US Stock market & economy. More so we have a large cluster of distribution days which I take as unhealthy. However with all that said…
My weekend watch list is the follows:
The NASDAQ finished lower by 1.12% while the SPX fell 1.07%. Both broke back below major support. This has been a hard market for both bulls and bears. I have been on the sidelines seeing if we could take out the prior highs with conviction….The last 4 sessions have been ugly to say the least.
Volume was mixed yesterday with slightly higher on the New York and a bit lower on the Nasdaq. This produced another distribution day on the New York averages. Could this be another nail in the coffin of a tired bull market?
The Nasdaq has now lost all those gains of the prior week and are back in their previous trading ranges. We are in a trendless late cycle situation when making progress is very difficult. Frankly I don’t think it is even worth playing around in this environment.
I recently had a call from a very opinionated so called investor. He explained to me every reason that the stock market will crash and gold will go up to $5,000. He further explained what is happening now is only short term that he is losing money.
He clearly did not understand the concept of trend following and not having an opinion in the stock market or gold market.
2015 Was a choppy market for most stocks. Many stocks broke out however they failed. With that said…
Palo Alto and Sketchers trended wonderfully. Combine fundamental and technical studies in order to succeed.
So many breakouts over the last several months have failed in the leading stocks. The goal we adhere to is buying the strongest stocks when the market is healthy. Will we see a replay of the last time the Nasdaq made new highs? The pundits simply point to Google as proof of a Super Bull cycle.
On the positive side, volume in the stock market was higher across all indexes Friday. However volume is expected to be higher on an expiration day. Leading stocks showed some mixed performance as well but were overall stronger on the session. Time will tell…However I believe prudence should be adhered to. I believe that it probably a good idea to position size a bit more carefully and not get carried away by getting to heavily invested. It is better to make less money if the move proves to have legs.
My two cents…Trading in the stock is a marathon. There are times to be more aggressive and less aggressive.
I am far from being any stock market guru…however yesterday looked somewhat like a follow through day. The Nasdaq had a gain of 1.26% while the SPX was up only .80%. It is interesting how the panic over Greece seems to be pleasantly forgotten…As well as the Chinese Bear market.
New Highs…New leading stocks…the question is will it hold. We have seen so many recent breakouts only to fail…
Watching the following:
FB Facebook Inc
FIT Fitbit Inc
GTN Gray Television
PANW Palo Alto Networks Inc
DATA Tableau Software Inc. Class A
FSB Franklin Financial Network Inc.
HQY Healthequity Inc.
SKX Skechers U.S.A.
It seems to be a very common theme I have when I teach and mentor. Many are looking for new indicators or methods. After their first shock on his simple my layout is they start to realize their mistakes.
The reason students look for these answers is they want to avoid losses. Can not happen. There will always be losses. On my screen I have volume, two moving averages and I color code my bars just for a little eye candy. That is it…Buy signals are based on simple X day breakouts or patterns which I have shared before…Want to see breakouts with volume. This shows conviction.
Stops are based on profit targets and when I have great conviction with a stock I trail it with both he 10 day and 50 day moving averages…That is it…Not rocket science…My selection of stocks is different than the norm. I want to buy the strongest stocks when the market is healthy…
The 50 day moving average is serving as resistance for both the index and their relative strength lines. It would be a very positive sign if they could clear this important moving average with some conviction. The market is trying to rally after it’s recent decline. How far this rally attempt goes and weather or not it turns into something worthwhile?
My confidence level only will return if we can take out the prior highs on both the SP 500 and QQQ