Once again NASDAQ had a pretty erratic week moving lower against a daily uptrend with no real trend in the swing points, finishing the week with a large gap up. We are still in a two sided choppy market. These aren't conditions I'm trying to be very active in, but with that said I am staying prepared and on the watch for something to happen either long or short. The Dow Jones was in a position where sellers had a real shot at forming an intraday trend below break even, but they were too weak to make it happen and the gap up on Friday completely negated that potential situation. Next week I'll be watching the
gap low support to see if bulls want to do something with that and maybe help get the rest of the market in shape.
NASDAQ created importance again this week at the $110 level with the lower high it put in Monday. Right now that is the level I need to see broken with an intraday trend for a healthy market to resume. The Russell is still being supported above break even/$120 and I'll be watching
this 30m chart to see if buyers want to reverse it and create some opportunity. Buyers have the chance here to reverse the Russell, hold the Dow above gap low, and get NASDAQ back up near $110 all at the same time to really get some flow back in the market. That is something we would expect to see in better market conditions, but I thought I'd bring it up anyway if it does start to play out.
Even with the lackluster market environment we are in there are some decent looking stocks out there starting to form and even trigger some setups. AKAM, MA, BMY, JPM are being triggered with green days and sustaining on red days (in the indices), signs of health in those stocks. FB & GOOGL are being supported above break even for some bounce action. TSLA same thing but for continuation. AMZN and NFLX holding up as leaders. GPRO still holding 130m trend with a nice weekly chart. BABA & YHOO reversals to revive those weekly charts. It's not about the setup so much as it is about how price reacts to the setup. And that has a lot to do with trend and market conditions. That's why I always throw out a lot of setups and use the reactions to filter out which of those was a successful one and that's where I put my focus to make trades inside the trend. A good setup for me only means there is a place you can define your risk at with a high probability of holding inside of a trend. The rest is up to the market to decide.
So there is some opportunity happening but there is still nothing to work with on the indices and that has been a big part of my process. If buyers at least hold up the indices to the point where good looking stocks can perform then I'll start dipping my toes in more, but even with choppy conditions short selling swing trades has not been so great. And if it does work out, you are shorting into support and uptrends then you get gap ups like we saw Friday and wonder where that came from. I'll just stay patient and wait for what I want to see, which is a nice trend I can work with and clear market conditions. Thanks for reading
-Michael
