Quick Summary:
SPY tested three major pivots, but in the end did nothing. Focus list additions MATX and CLR (short). GS testing resistance. A number of short setups in the midst of forming, but bias is not big enough to load up on shorts, yet. Focus list longs are at or near entry levels. Two trade alerts today, TSLA and EZCH, both long.
The Market
Key SPY Pivot Levels: 198.20 : new high resistance, 196.25 20 dma, 192.61: 50 dma
Under the Hood and Trading Game Plan:
Please read this Report from last week if you have not already, along with the update with stocks. It still important and still very much applies.
Today was an interesting day, as we got everything and a whole lot of nothing. In one day, we got a test of the high, a gap fill and a test of the 20 dma. Still we ended up pretty close to where we started with a small .19.percent loss. The gap fill was an easy call with the way the market was setting up, as we talked about yesterday. However, I did not think the bounce would occur on the same day.
I currently have a slight bias to the down side for a minor pullback, possibly to the 50 dma. However, it’s not big enough that I am going to make any big bets or get heavily short. Currently I only have 1 short position and two longs.
The overall game plan is to remain cautious. I won’t be making any aggressive plays until I see some real clues. Until that time, I will reduce position size and take some stabs, both long and short.
Current Trades
I am still holding AAPL short.
I entered EZCH (26.21, s 25.50 t 28) and TSLA (219.23, s 214 t 230). You should have received alerts.
EZCH is a classic breakout-pullback setup. TSLA is a breakout pullback, but not as “clean”. Also, it is tricky because of the looming 50 dma which is only two points from my stop. I can’t place my stop under the 50 dma because it would ruin my reward to risk ratio.
Here is the Trade Journal. It is updated with everything but the current open positions.
The Focus List
Last week we talked about having a few stocks in five different categories to key on, but no real entry level focus list stocks. With the pullback and many stocks pulling back to key support, or breakouts that have pulled back, I am going to include the regular focus list this week.
Not much action today in the focus list. I did enter TSLA and EZCH. KS stalled right at resistance and could be a good short setup.
New Additions:
MATX is developing a post breakout range. I am going to wait and see if it pulls back into the range shown in the chart.
CLR is on the bullish list, and it is still in an uptrend as it has not broke the 50 dma. However it dropped out of it’s recent trading range on high volume today. A pullback toward $150 or a break of the 50 dma would signal short setups.
All of the stocks in the shorts category below are in the midst of forming nice setups. I am watching them closely.
Here are the categories we started watching during last week’s pullback. Click on stocks for charts.
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, AA, MATX
3) stocks that reverse off big down days intraday (hammers) UAL, LUV, JBLU
4) Select shorts AAPL, AKAM, KS, SDRL, GRMN, MSM, SDRL (GOOGL removed)
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
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.
GS joins GOOGL and FB as another market leader bumping up against resistance. These might be worth a speculative short position with small position sizing. If the market pulls back, these could pullback hard, and the patterns don’t scream strong breakout. Stops should be tight right above resistance.
ETF/Sector Analysis
I am still working on a tradeable ETF list.
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.
New subscribers and trial members please leave me any feedback/comments in the comments, via email (singhjd1@aol.com) or twitter (twitter.com/PaulJSingh).
