MARKET MOOD: Red
The summary below is my interpretation of the data in the ‘Market Mood Log’ above:
The whipsawing market continued last week and is showing signs that it’s likely to continue next week. The primary drivers leading me to this point of view are: bifurcation of the major indexes, whipsaw on daily and weekly charts of the indexes, new lows increasing on the NASDAQ, few quality setups, and a universe list that continues to shrink. The reason why I feel its likely whipsaw vs rolling over is because the major indexes are at major support levels and have found support at these levels before. The monthly timeframes are consolidating, not breaking down yet, and there are a handful of momentum plays in sectors like Energy, Chips, and Chemical.
- Whipsaw on the indexes: predominantly seen on the weekly and daily time frames. The price action remains wide and loose and caught between major levels of support and resistance. It’s like a tennis match with each side continuing to hit the ball. The NASDSAQ and Russell 2000 are below their 10wk lines. The NYSE actually hit a fresh all time high last week.
- New Lows are picking up: The NASDAQ kicked off the week with -299 new lows on Monday and had -294 new lows on Friday.
- Distribution picked up on the Dow: There are now 4 distribution days within the last 10 trading days on the Dow. This is what is known as a ‘distribution cluster’ and a sign that selling pressure is picking up.
- There are 32 stocks total on the trade ideas list. An improvement in breadth, though still light. The quality of these setups are mediocre at best. I only consider 2 of them decent enough for me to trade right now. GLD and WLL. More below…
- Open Trades: I had a few positions on last week. RJF was scratched at breakeven, FANG had a small gain, and ARLP is still open and profitable.
HOW I’M PLAYING THIS HAND: I’m still putting defense first, even on new trades. The one momentum play I like presently is WLL. WLL has shown heavy accumulation the last 2 weeks and has followed through to the upside. Its one of the leaders in the oil & gas group and that group is presently leading. I’m planning to put on another small 1/4 size position on. I also like GLD as a long term play here and am placing an order for that as well. Please see the action list for further details.
Checkout the charts of the indexes below.
MONTHLY CHARTS (indexes) Over all Direction = Sideways: https://www.tradingview.com/x/dp76k5Id/
WEEKLY CHARTS (indexes) Over all Direction = sideways: https://www.tradingview.com/x/ppjF7wyx/
DAILY CHARTS (indexes) Over all Direction = sideways: https://www.tradingview.com/x/YnRgLXhG/
(on the lower right is FFTY, the ETF that tracks the IBD 50)
MARKET MOOD REVIEW
Trade Ideas, setups for the week ahead and group discussion (Mike)