In this video I walk you through our analysis of the overall market conditions for the past week. I show you the ETFs that we have been focusing on and some of the stocks that we traded this week.
We also discuss our trading strategy for next week and the indicators we are looking for to see where the market goes from here.
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After starting the week on the down side both the DJIA and the S&P turned around on Wednesday.
Both indices finished the week with two days of modest gains.
The NASDAQ lagged behind a bit despite a few bright spots in the tech sector.
This latest move puts some of the sector ETF's back above their 50 day SMA's and has all three major indices trading right at theirs.
For short term traders that focus on price action and volume the move that happened on Wednesday was a good indication that the UP momentum would continue.
The DJIA was the best indicator of things to come.
The early morning sell off quickly turned into a reversal which had the short sellers covering their positions once again by days end.
This day formed a bullish engulfing bar in the DJIA with impressive volume to boot.
Once this continuation pattern was evident it was a good chance to look to the LONG side for some short term trades.
If you trade the ETF's then $XLF, $IYF and $SMH had good chart patterns to trade.
If you were looking for individual stocks then $APC, $$NBL, $ARG, and $VAR were on the radar.
Just remember that we are in SHORT TERM trade mode.
Quick trades…get in and get out. We are not holding our positions with the long term outlook in mind.
We have a lot to consider as we move into trading next week.
There is still significant overhead resistance to contend with.
The NASDAQ is not really participating with much conviction in these UP moves.
Just some food for thought!
Don't try to outguess the market.
Let price and volume tell the story and act accordingly.
Until next week…Good Trading to YOU!
Swing Trading BLOG – Swing Trading BOOT CAMP
First things first…
Happy Thanksgiving! We hope you and your family enjoyed your holiday!
The markets opened with a bang this holiday shortened week.
Monday traders watched as the market GAPPED UP after weeks of relentless selling pressure.
The move was somewhat expected (as we mentioned in last weeks post) since the market was trading in severely OVERSOLD territory.
All three indices traded basically drifted higher on LOW VOLUME the entire week.
You can argue of course that this low volume is to be expected on a holiday week but we know that it is also a telltale sign of a retrace in down trending market.
The "bounce" was a big one nonetheless.
The Dow Jones Industrial Average rallied over 400 points in fact.
The sellers have taken a break (for now at least) and that is a good thing.
The thing to remember though is that we are still in a text book DOWN TREND.
This latest "bounce" was a retrace on LOW VOLUME.
So what happens from here after such a big bounce?
Who knows.
Some people are calling for the BEAR to lose steam and the BULL to return.
More are saying prepare for a lengthy BEAR market by getting your SHORT strategies ready to launch.
What do we say?
We say…WHO CARES???
As short term traders we need to be ready for whatever the market decides to do regardless of direction.
We are NOT investors.
If the market rallies higher? Great I have a strategy for that.
If the market starts to sell off again? Perfect because I have a strategy for that.
In last weeks BLOG post we gave you the details of our trading plan for this past week.
It played out almost exactly as we described.
Our remaining SHORT positions were stopped out so we were flat going into Tuesday,
The stocks that we mentioned that were showing signs of strength ($K, $V, $CREE, $FB) made some nice moves higher.
Did we jump onto the LONG side?
Not at all. We traded our plan and our plan was to reevaluate after the retrace was confirmed.
The gap up and drift higher scenario would have kept us out of the market anyway.
In hindsight the moves in these stocks would have produced some nice profits.
Our strategy (in this case) was not to buy stocks on a "bounce" in a strong down trend.
We followed our strategy and watched the market for the last 3 days of the week without doing anything expect getting ready for the next move.
Next week we will be watching to see if the down trend shows signs of returning.
If it does we will get SHORT all over again.
If the market shows signs of change (from BEAR to BULL) we will be prepared with a list of LONGS to jump into.
We always try to teach you you be prepared for anything and act accordingly when its time.
This upcoming week is no different!
Until then…Good Trading to YOU!
Swing Trading BLOG – Swing Trading BOOT CAMP
The SELL OFF continues!
The markets opened up on Monday with traders anticipating the selling was (hopefully) coming to end.
Mondays lack of volatility was quickly followed by a bearish engulfing reversal bar on Tuesday.
The sellers then continued to bring the market lower to end yet another down week in this most recent downtrend.
This move brings the major indices down to a severely oversold level so a "bounce" next week is a probable.
Looking across the list of sector ETF's we see now that every major sector is trading below the 50 day SMA.
This includes the ultra strong Homebuilders ETF ($XHB) which finally broke down this week.
So with the market turning extremely bearish and the chance of a "bounce" this week what is trader to do?
Well it really depends on your trading business plan.
Does your business plan keep you out of LONG trades in a BEARISH market?
Or does your plan let you trade both LONG and SHORT regardless of the trend?
Your plan should be based around your individual trading beliefs and personality so make sure you take the time to lay out your plan.
With that being said we need to decide which action (if any) we will take if we do see the market "bounce" next week.
If the market does indeed bounce we anticipate being out of most if not all of our STS trades.
We would not look to get LONG but merely let the market play out a reevaluate once the retrace was in effect.
We also would not look to add any more SHORTS at this point even if the market continued lower out of the gate on Monday.
Chasing the market down at this point has low probability of success.
We will continue to be in SHORT mode until the market gives of signs of change.
There is a short list of stocks ($K, $V, $CREE and $FB looks interesting!) that are holding up during this down trend.
As always we will have these on our watch list to see if the strength continues.
Follow your plan and stay on the right side of the market.
Until next week…Good trading to YOU!
© Swing Trading Boot Camp 2024
