Quick Summary:
Video analysis of SPY and focus list. Long and short setups for SPY. Divergence, price and volume action matter. Focus list Z, WYNN, YY, DECK, SPNC and TRLA. Market leaders NFLX and GOOGL watched closely.
Video Analysis: How to Trade the SPY Breakdown:
The Market
Key SPY Pivot Levels: 199 : recent old high, 197. 33 dma, 194.47: 50 dma
Under the Hood and Trading Game Plan:
SPY broke down hard and blew by the 20 and 50 dma. Not only did we get a big gap down, but also a big down bar. This type of action lays waste to all of those who have told us that divergences, poor breadth and negative volume patterns don’t mean anything. These three things tell us what is moving the market, and it’s been obvious that the market was running on fumes.
Obviously I would have liked to short where I had talked about around $199. However, as some of you have stated, that does not mean our analysis was all for not. More important than taking the short trade, we *protected ourselves*. We lowered position sizes and have minimized any losses that will come. That is why we analyze the market.
I talked about this in the video (check it out if you have 5 minutes), there are two or three trade setups we are waiting for now. If we get a low volume bounce back toward the 50 dma, we look to short. If we get a hard bounce to the old gap at $190, we can get long with the expectation of a bounce. If we get a remount of the moving averages on strong volume, we get long again.
IWM blew by an entries and will have to either bounce for a while or drop down to old lows before I consider it for a trade (either short or long).
Current Trades
GMCR and GWPH are still holding above stop areas. Stop for GMCR is $117-117.50. GWPN is just under $80, though some will place it under the moving average.
I entered focus list stock DECK today. Entry in alert.
The Trade Journal results
The Focus List
Today the only shorts I am looking at are the indexes. The only longs are the breakouts listed below and WYNN, YY and Z. Longs will be taken cautiously, if at all. It is important to watch the price and volume action on the pullbacks. Z around $140, YY around $74-75 and WYNN around 208-210.
During earnings season I keep an eye on breakouts. These are not necessarily focus list stocks that are near entry levels now, but I keep a breakout list and over the days and weeks ahead, I watch for good pullback or post break consolidation entries.
I have included all 15 breakouts that I am watching for those who like to monitor this type of stuff. For most of these, I am looking for pullbacks either to the bottom of the breakout bar or gap fill.
For the most part the breakouts held up well. DECK, SPNC and TRLA are near entry levels. SWI, RES and INO show signs of breaking down by moving past initial support levels.
Market Leaders
These are stocks that I always watch, though they might not be in my tradeable watchlist, nor are they actually always leading the market.
Z nears entry level. I may look to short NFLX on a bounce. Watching to see if GOOGL rolling over or just pulling back.
Please read the post 23 Laws of the Part Time Swing Trading the Market Speculator Way and How to Anayze Your Swing Trade Results It is important to know these rules if you trade off the Report.
New subscribers and trial members please leave me any feedback/comments in the comments, via email (singhjd1@aol.com) or twitter (twitter.com/PaulJSingh).
