The Ps had a modest rally. So far though, they only appear to be pulling back from their recent slide. And, so far, they still look like they have the potential to Bowtie down. Bigger picture, I remain concerned by the fact that they didn’t clear their prior peak recently with much vigor. This keeps a potential longer-term topping pattern in place (see recent webcasts regarding double tops) with a potential short-term pattern developing.
If you don’t know anything about chart reading, you could ask yourself: Self, where was the market 3 months ago? (around 1660) And, where is it now? (around 1660). So, at the least the market has gone sideways.
Speaking of sideways, someone recently asked me “What if it is just summer?” Well, you don’t stop being a market technician just because its summer. A market can trend, top/bottom, or just plain trade sideways in any month of the year. Yes, markets do tend to be choppier in the summer but you don’t ignore patterns just because it is summer. Trust me, if there were hard and fast rules like this, I’d be the beach and not sitting in front of all these monitors (now you know why I glow in the dark). Yes, the whole double top/Bowtie in the Ps could just turn out to be a big summer sideways movement. However, you can’t ignore it, even though we are still in the summer.
The Quack had a decent day. It managed to tack on over ½%. It looks a little better than the Ps. It is just shy of multi-year highs. I wouldn’t get too excited here just yet unless they prove themselves by taking out those highs with vigor. And, if it did, I sure would like to see the Ps confirm.
Not too much has changed as far as opportunities. I still think some of the previous high fliers that have recently begun to fall from grace like Retail could set up soon. See my “Go Go No Mo” strategy under education for more on shorting high fliers. There’s no need to be a hero just yet though. Wait for setups and then of course, wait for entries.
It took me years to realize that you do a lot of waiting in this business.
So what do we do? Not a whole lot has changed: The Ps still don’t look so good but you know me, I’m a one-day-at-a-time kind of guy when it comes to markets. I’d continue to keep an eye on the index ETFs for possible shorting opportunities but only (again) on setups and a trigger. This will help you to gain exposure to the short side while looking for setups. Once again, with the notable exception of the recently mentioned Metals & Mining stocks, I’d avoid the long side for now. If the market is going to resume its longer-term uptrend then it will have to prove it to me by making new highs. I’m totally okay with giving up the first few percent of the move. You’ll always be a little late as a trend follower. You have to wait for the trend, and then, follow it. Makes sense, huh?
Futures are flat to soft pre-market.
Best of luck with your trading today!
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