MARKET MOOD: RED
UPDATE 08/15: The market mood is in a red condition heading into next week. The reason for the downgrade is due to the lack of quality and quantity of setups.
Upon closer investigation, I really only consider 3 of the 15 setups I found to be truly ‘ready.’ The others are close but need more time. The quality of the 3 aren’t fantastic. 1 ‘B’ level trade and 2 ‘C’ level trades. In my view, heading into next week as far as new trades go, this is a time to pump the brakes.
Here’s a summary of what I’m seeing presently:
- 3 major indexes are extended. The S&P 500, Dow, and NYSE all hit fresh highs last week and closed near the top of their ranges for the week. They’re slightly extended. The NADSAQ and Russell 2000 are in sideways trends. Hold that thought…
- The New Highs vs New Lows list is beginning to DE-STABILIZE again. New Highs on the NASDAQ are drying up and the number of new lows are exanding again. It remained that way the entire week with new highs and new lows being both in the 70s to end the week. On the NYSE, the list was back to normal for a market at all time highs this week, triple digit new highs and new lows in the teens.
- Distribution Days continued to fall off. Neither the S&P nor the Dow picked up any distribution last week. Over the last 10 days there have only been 0 distribution days.
- There are only 15 setups this week, down from 24 last week. Only 3 are truly ‘ready’ and consist of 1 ‘B’ level trade and 2 ‘C’ level trades.
- 2/3 of my open trades are positive. I closed several positions last week including ZIP, CROX, TRMR, and VSTO resulting in 2 wins and 2 losses, overall +2.6R
- 5 of my last 10 trades were winners. This is within my historical batting avg about 40%.
Given the above, I’m back in a red condition. I realize how this flip flopping of red to yellow and back to red can be frustrating. This used to frustrate me too! My frustration came from wanting a market condition other than the one that was in front of me. Eventually, I came to the realization that we can’t trade something that isn’t there and attempting to do so causes even more frustration.
To paraphrase my friend Adam Sarhan, we can either sit in traffic and be all hot and bothered about it, or we can take it as an opportunity to turn the radio on and sing our favorite song. Either way, we’re sitting in traffic.
Checkout the charts of the indexes below.
MONTHLY CHARTS (indexes) Overcall Direction = Up: https://www.tradingview.com/x/AhAFcTtW/
WEEKLY CHARTS (indexes) Overcall Direction = Up: https://www.tradingview.com/x/e2HZpWeE/
DAILY CHARTS (indexes) Overcall Direction = Up: https://www.tradingview.com/x/pl0Es4Z7/
(on the lower right is the image of stocks hitting new highs vs new lows on the NASDAQ & NYSE)
Deep Dive Video