MARKET MOOD: YELLOW
From what I’m seeing, the market market mood has finally shifted and is now in a ‘yellow’ condition this week. There’s even a few elements of it shifting toward a ‘green’ condition.
For clarity, here’s what I mean by a ‘yellow’ condition. When any of these conditions appear, the best condition I’ll assign is yellow.
Initial buys are 50/50
Trade ideas are 50/50
Some ‘B’ and ‘A’ setups
New Highs vs New Lows are mixed
Indexes are mixed
Last week I attempted 2 trades: FOXF and ESI and went 1 for 2, batting .500. This helped shift the market mood from red to yellow, but had I selected different trades from the Trade Ideas list last week, I may have batted 1.000. Most of the trade ideas from last week advanced. There were a few absolutely stellar performers on the list such as VRTV, FLL, and RBLX. I shied away from those due to the width of support/resistance on the daily timeframe. This week I’ve adjusted to use tighter stops w/ confluence on the 30min timeframe.
This week has 3 ‘A’ level setups which is the most I’ve seen in a while, and many ‘B’ setups. It got to the point where I’d only run things through the Gauntlet where I had a gut feel of a 5. In case you didn’t already know, ‘gut feel’ of a 5 is my first qualifier for an ‘A’ setup.
The new highs vs new lows list on both the NYSE and NASDAQ are about the same as last week. Single digit and low double digit new lows, new highs in the high double and low triple digits. Seeing it beginning to stabilize here is a positive.
Finally, the major indexes are still moving sideways. If you took a lazy approach and just saw them as ‘uptrend on monthly’, ‘sideways on the weekly and daily’, you may think that it’s the same as last week. However, while still trending sideways, the price action did tighten up on the indexes last week and also pushed higher. Consolidating tighter and near highs brings the indexes closer to breakout levels while simultaneously biding time for the longer term moving averages to play catchup.
For me, its an improving market. I like what I’m seeing heading into next week. But its not a rip roaring bull market like what we had in Nov – Feb. It’s still a time to be selective and for me, I’ll be playing with mid-sized position sizes.
Checkout the charts of the indexes below for a closer look at the action.
MONTHLY CHARTS (indexes) Overcall Direction = Up https://www.tradingview.com/x/X6hdrxPn/?aff_id=15325&offer_id=10
WEEKLY CHARTS (indexes) Overcall Direction = Sideways: https://www.tradingview.com/x/PxQZE3G7/?aff_id=15325&offer_id=10
DAILY CHARTS (indexes) Overcall Direction = Sideways: https://www.tradingview.com/x/LxBIVRXW/?aff_id=15325&offer_id=10
(on the lower right is the image of stocks hitting new highs vs new lows on the NASDAQ & NYSE)
Deep Dive Video