SPY holds 20 dma. BWLD confusion. Latin Banks. Mostly waiting for market to play out. Holdig DUG and AAPL short.
Key SPY Pivot Levels: 198.20 : new high resistance, 195.63 50 dma, 192.02: 50 dma and old high
Under the Hood and Trading Game Plan:
If you have not already, please read Monday evenings Report, along with the update with stocks. It still very much applies.
SPY held the 20 dma today, which is positive but does not predict the future. We will continue to wait and see if it holds.
The best place we can enter long is a combination of the 50 dma and stochastics hitting oversold levels. This would give us a strong probability of a bounce trade.
Take note that since mid-May, there have been 4 strong down days (both volume and price), with only one strong up days. The move has been a “float” to new highs, which does not build momentum. We have continued to play the float up, but understand that the likelihood of a strong pullback is high.
The game plan is the same. We mostly sit on our hands until the market gives us some clues. If taking positions, do so with small position size.
I am currently holding DUG and short AAPL. I exited BWLD when my stop was hit.
There was some confusion today about BWLD due to my second BWLD alert detailing the bounce. It was my mistake confusing my BWLD daytrade with the swing trade. Those of you who were stopped out, I was too.
Here is the Trade Journal. YY, AAPL and BWLD entries still need to be added.
The Focus List
We are doing the focus list a little differently for the time being. Here are the stocks being watched in different categories as the market shakes out.
Most stocks did little or bounced within range. Not much setting up yet. The hammer reversal stocks were all up big (JBLU, UA, LUV). Today we have 3 stocks that put in big reversal hammer candles: Z, COP, FANG. If trend resumes, these should mark the bottom for these stocks.
1) get extremely oversold and near major support for bounces (rubber band setup)
I am not just looking for oversold readings here, I am looking for extremes. We are not there yet on most of these. There needs to be more selling, price nearing important support levels, and extreme readings. At that point we increase the probability of a bounce. If SPY can pullback to the 50 dma (see chart below), a bunch of these will setup.
GWPH, IPXL, KS, EZCH, Z, TWTR, YY, Z, TSLA
2) stocks and sectors that are holding up well (possible rotation or new leaders)
Energy, metals, gold, silver, apparel
BKS, FANG, PTRY, BWLD, CTRN, TAP, CODE, GMCR, X, FCX, XOM, COP, CZRO, NOV, CLR
3) stocks that reverse off big down days intraday (hammers)
4) Select shorts
5) Pullback shorts (bounce to resistance after big drop–often was a rubber band trade)
We need to wait and see for this list. Many will come from the stocks that bounce after extreme drops. Big Drop – – -> bounce – – -> short setup if bounce on weak volume and price action
I usually don’t add the breakouts/breakdowns that I am watching to the focus list until it is close to entry, but since we are playing the watching game right now, here are a few that I am watching develop.
These are stocks that I always watch, though they might not be in my tradeable watchlist, nor are they actually always leading the market.
Lots of meaningless bounces or holding the line. The healthiest action was in FB.
Latin Regional Banks . . .that’s where it’s at right now. It may be time to dig deeper here. If the market corrects, this, along with airlines, have a chance to be the new leaders.
Please read the post 23 Laws of the Part Time Swing Trading the Market Speculator Way. It is important to know these rules if you trade off the Report.
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