MARKET MOOD: RED
The summary below is my interpretation of the data in the ‘Market Mood Log’ above:
- Major indexes improve but tug of war continues: The indexes are firmly sideways across the board and are caught between the support / resistance levels as well as the 50 / 200smas. Only the Russell 2000 isn’t stuck between its moving averages but that’s because its moved sideways for so long that all the moving averages have converged. Here’s a look at the Russell (click). Nuts, isn’t it? If that weren’t enough, each time a distribution day has been ready to fall off the count, the indexes have picked up a fresh one. It really is a strong tug of war!
- The New Highs vs New Lows started to rebound. They started off the week negative but rebounded a bit on Thursday and Friday. If the market continues to chop, this will likely drop back into the red. If it breaks out, we’ll likely see follow through here as well. And if not, I’d be suspicious of the new trend.
- More Distribution this week. As mentioned earlier, each time a distribution day has come off the count, a fresh one has been added. The count over the past 10 days on the S&P is at 3. If it picks up another we’ll have a ‘cluster’ and this increases the odds of downside pressure.
- There are 35 stocks total on the trade ideas list. Mostly B and C level setups. There’s a few ideas that we discussed as potential future leaders like SNOW, ABNB, and ASAN (okay ASAN has already been a leader). They’re consolidating but given their charts on the daily time frame, you’re really banking on them to run immediately OR you’re using a very wide stop to enter immediately. They could improve mid-week and I’ll be keeping an eye on them.
- 1 out of 5 of my open trades are in profit. Not exactly what I like to be holding over a weekend but each have major support levels and decent action on their weekly time frames. If the bulls win the tug of war, these will hopefully be among the first to continue rallying. Each of the RS lines are at highs. MATX, KFY, WCC, DFIN, UPST.
- Over my last 10 closed trades, my batting avg is back to 50%. We’ll see if it stays that way.
HOW I’M PLAYING THIS HAND: Sometimes the best thing to buy is more of what you’ve already got. I’m planning to add to my position in UPST next week if it follows through above last week’s high. I’ve outlined my plan in the action list above.
Checkout the charts of the indexes below.
MONTHLY CHARTS (indexes) Overcall Direction = Sideways: https://www.tradingview.com/x/ypvidKgm/
WEEKLY CHARTS (indexes) Overcall Direction = Sideways: https://www.tradingview.com/x/251hPlXV/
DAILY CHARTS (indexes) Overcall Direction = Sideways: https://www.tradingview.com/x/pWhZduGL/
(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)