Welcome to the Weekly Game Plan! The 'MARA Lists' are updated in real-time. The 'Market Summary' is provided weekly. The 'Deep Dive Video' is the recording of our weekly Trading Prep DEEP DIVE.
MARKET MOOD: Red
The summary below is my interpretation of the data in the ‘Market Mood Log’ in the spreadsheet above:
Indexes followed through to the downside: The bear market rally ended 3 weeks ago. It started to roll back over 2 weeks ago. And then it followed through this week. If you have a look at how the color coding is overlayed on the NASDAQ, it captures this perfectly. Each of the indexes across time frames is in confirmed and sustained downtrends. What makes it more ominous is that the Russell 2000 and NYSE each closed below prior chart highs from 2020 that should have acted as support. They didn’t. The price action on the daily timeframes has also gotten wider, looser, and more ‘gappy’.
New Lows dramatically outpacing new highs: New lows consistently hit high triple digits in the 400-500 ranges while new highs were in the single digits by the end of the week.
Distribution rising: Both the S&P 500 and Dow have 4 distribution days in the last 10 days. That’s a distribution cluster and a sign of increased selling. The fact that distribution is occurring not from a rally but while the market is making new lows is a sign that fear is on the rise.
There are 23 stocks total on the trade ideas list. 19 of them are short setups and 4 of them are long. The long setups are of low quality and I won’t be taking any of them at this point. I’m keeping them on the list as this is a key determinant of market mood for me (see market mood video below for full conversation)
Open Trades: I’m currently short COP. I went short on Friday as it followed through after a gap down.
HOW I’M PLAYING THIS HAND: As of this writing I’m still working through the trade ideas list. There are a few strong short candidates I’m interested in. I’ll update the action list and discord with any ideas I plan to add. This week’s MARKET MOOD video includes insights about my screening process and looking for shorts.
Best Selling Author – Trading Coach – Creator of the Trade Gauntlet – Founder of MaraWealth.com
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