Quick Summary:
SPY short and long setups. TWTR and GMCR speculative short setups. TLT bounce. Expective pullbacks to setup early next week. Trade Journal updated with GMCR and TWTR exits.
The Market
Key Pivot Levels: 196.05: new high resistance 188.90: 50 day moving average 181.31: recent low 181-184: plenty of buying in this range.
Under the Hood:
The move that I had been expecting came today. One day basically wiped out 4 days of tiny gains. Notice that volume picked up today. That’s been the pattern since mid-March, and is not the sign of a strong trending market. Are we topping? This is what happens at tops, but it takes time, sometimes months to play out. Since we are only playing moves that last 2 days to 2 weeks, we don’t need to worry about that just yet.
Trading Game Plan:
In the more immediate term, we could see a pullback to strong support at $190. I am going to look to short a move above $194.50 tomorrow, with a stop at $196.15. My target is $190.
We are already starting to see pullbacks in many focus and watch list stocks. If we get a few days of pullback, next week we should see some fantastic entry points.
The Focus List
When I entered GMCR I talked about a trading range that is bought at the bottom and sold at the top. We are not at the top, so the short setup is here. Keep in mind that this is a speculative, somewhat risky trade, especially the way this stock has been moving. I would only take this trade if I can watch it during the day. Don’t expect an alert from me as I will be in and out and likely won’t take the trade. Entry in the $120-123 range, stop at $124-125, and target at $110-113. Notice the very loose numbers here. It really depends on where you enter and how the stock is moving. Make sure when entered you get at least 2:5: 1 risk ratio.
TWTR is another speculative short setup. Overall the stock is very strong, looks like it’s bottoming and is now hitting the 50 dma. This could cause it to pullback. If it does not gap up tomorrow, it can be entered here near the 50 dma. Stop would be at $37.15 with a target at 33.50-34.50. This is another setup that must be watched closely. It’s the “speculative” trade that can easily be a loser, but if manged right losses are small and wins can be quick and big.
CAT is off the focus list with today’s big down move. The rest of the focus list remains the same.
The Watchlist
The watchlist is still in the process of a complete overhaul. Lots of new sectors and stocks represented. It will be complete by Monday. Since we trade off the focus list, this should not be an issue for traders.
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 (TSLA in recent months).
For the most part, the market leaders are pulling back like we want. If this continues, we should get some good entries next week. Two exceptions are CAT, which pulled back too hard for my liking, and GMCR, which was up big. Right now it is a “traders’ stock, not really giving a care about the market or it’s own internals, but giving traders volatile, yet predictable trades.
Sector and International ETFs
We have been watching TLT for a while and I know those who had entered were getting a little impatient. Today was the payoff with a textbook move off support. It can still be entered on weakness.
Current Trades
I exited GMCR today for a big gain, and entered and was stopped out of MCK for a small loss. You should have received alerts for both. I know some of you didn’t and that “bug” in the software has been taken care of. I am still holding YELP and KORS, both acting strong today.
Here is the Trade Journal with current open and past closed positions.
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