13 Observations on this market

I’ve been relatively quiet lately and a lot of that is due to the way the market has been trading. While I would love to say I took advantage of the recent weakness, the truth is I’ve been mostly taking it light with my trading. The market is in a difficult place for swing traders right now as we are oversold enough that shorting is likely too dangerous, yet it is too early to really get long in a meaningful way. Tops and bottoms are hard to trade and there is a decent chance we have more weakness ahead as we move into the summer. I jotted down some observations to see if a pattern emerges, and while I believe we have a good shot of bouncing within the week, there are enough warning signs to keep me mostly disengaged in my swing account from the markets for now.

Bearish observations

  • $SPY $IWM $DIA $QQQ are below their 50 ma
  • All other than $DIA failed to make new highs on the last thrust in April and then proceeded to make lower lows.
  • That lower high could be turning point in a larger topping process
  • We are heading into a seasonally weak period (summer trading season)
  • Volume has been higher on down days
  • There have been lots of topping tails recently showing lack of confidence at the close
  • As shocking as it sounds, traders have been selling Ipads ($AAPL) and burritos ($CMG) showing faltering leadership

Bullish observations

  • Weekly charts don’t really look bad
  • Market is oversold on some indicators (McClellan) and getting close on others (T2108)
  • Most of the indexes are near support levels
  • There are still some stocks acting well $LNKD $HSY $SPG
  • $IWM is holding up relative to its big brothers showing that there is still some appetite for risk out there.
  • $FB is coming

I see more negative in the intermediate term which has me on guard. Are we headed lower? I won’t insult you and tell you I know the answer without a doubt. But, trading is not about knowing with 100% certainty what the next move is. Its about preparing for and then  recognizing what is unfolding. I’ll be watching each of these observations to see if a new pattern emerges or if we settle into a true down trend.

 

Good Trading,

 

Joey

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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