Overall the market turned more bearish this week. If we’re thinking of a bear’s life cycle, this bear would be a little older than a newborn. If you’re a UFC fan, think of the kind of bear that Khabib was wrestling when he was a kid. That’s the kinda bear we’ve got so far. 🧸 …Here’s why:
While the indexes started to breakdown across the board on the daily time frames, they are near support on the weekly time frames for 3. The $SPX $NYA and $DJIA. Add to this that a few of the bigger names like $AAPL $ADBE and $BABA have been catching support around their 50sma. Reason to bounce? 🤔
While this adds some hope for the bulls and maybe some caution for the bears, I’m seeing far more stocks breaking down and setting up in bearish patterns than bullish patterns.
For swing trading, this remains a challenging environment. Pick your spots. Stay light and nimble.
For day trading, its been a great environment. Just on the QQQs we’ve seen 11R moves in less than half an hour!
It’s far easier to trade with the market than it is to trade against it. When you have Uptrends on the Monthly timeframe, Sideways trends on the Weekly, and Downtrends on the Daily… this equals a whole lot of chop!
Personally, I feel as though we’ll pull back more and at this point in time I have a bearish bias. That said, I’m prepared for chop in both directions which is why I want to be ultra light on any swing trades I take.
For day trades, its easier to trade in the direction of the trend since you’re working on intra-day time frames.
We’ve got interesting focus lists and day trade lists this week. Check them out here: https://docs.google.com/spreadsheets/d/12xlR_ZOx1MYgFmgPlvOt5zNfxie-F3Mra4NL5Rq2wr4/edit?usp=sharing
What’s grabbed my attention on the focus list is that many of the bullish ideas are in poor industry groups and many of the bearish ideas are in top industry groups! I think this adds to the choppiness thesis we have going this week. Its like both the bulls and the bears are running into the wind w/ parachutes on their back.
For that reason, I’m not diving into any swings next week. If that changes I’ll post here in the Trader’s Mindchat Room.
I do think this environment makes things interesting for day trading. I still have a bearish bias for day trades and suggest being patient and letting the setups come to you.
2 examples of patterns I’ve been seeing:
Lots of these kind of moves are happening in the afternoon. One of the keys to day trading is not to chase.
- Mara Trader ‘Weekend Assessment’ Sheet
- Trader’s Mindchat Room (free 7 day trial)
- Trade Emotionator (free position size calculator)
- TrendSpider (charts)
- EdgeWonk (trading journal)
- Options Geek (options EDU + new options chain)
- TradingView (charts)
- Favorite Trading Books
- Market Smith