The market did exactly what I didn't think it was going to do, a strong V shape reversal back to the highs. At first there were not many opportunities being triggered but towards the end of the week things were starting to be put in motion. This part of the move that we've already seen is a part I didn't mind missing at all. To have participated in that move you would have had to be picking at a bottom after a daily chart lower low looking for a short term intraday trend (15m it ended up being) to hold and carry the market against the bigger trends, and as beautiful as the reversal ended up being that just isn't my style and I would come at it the same way if it were to happen again.
Above is the 130m charts for SPY and QQQ, and 65m chart for IWM because I feel it's the more relevant time frame for that market. I'm watching the highs put in on 10-6 and 10-8 for SPY/QQQ since that is the last swing high put in, making the current prices equal highs. Some consolidation near these prices wouldn't hurt as it would give a higher low to work off of, give a little more time for the moving average to catch up, show that bulls actually are supporting the market not just whipping price around, and give time for more setups to emerge/trigger. The IWM is still in a really bad place on the big picture weekly/daily but the bulls have two things to use for more upside; 1) a false breakdown and 2) the 65m trend with higher highs and lows (or even 30m). Time will tell how they use it.
With all that said there are stocks looking a lot better than the indices. And as long as the indices aren't selling off strongly, they have the opportunity to trigger with higher probabilities. This is when I like to be active, good stock setups with decent to good looking indices. Some of these stocks are already set up nicely, others just have potential to set up nicely. The short list just has some weaker names for good measure. The indices would have to restructure themselves once again to go back into bear mode so I'm not really interested anymore in trading short side. WYNN and SBUX could even end up being long trades but too early right now.
Things have been a little volatile and I adjust my style as necessary but it's just the market we are seeing right now. We aren't in a clear trend like we have been for a while but things are looking better and setups are presenting again so take that for what it's worth. Thanks for reading and you'll probably see more of me on the stream if things keep going as they are.
Trade well,
Michael
