Disclaimer: This newsletter is not financial or investing advice. The information is for education purposes only and reflects only my own operation.
After losing 4104$ pivot right at the open last week, market finally found some support around 3858$ Thursday and rallied strong Friday to close the week in the UPPER HALF of the candle.
4104$ pivot was a very important level as I pointed out multiple time before. the mid-term trend is still down, with the market below all kma’s (except for the 5dma) and they are all trending lower. We have then to assume that what we are seeing right now is a counter-trend rally. So we’ll have to be very careful as market might pull into some overhead resistance in the coming days.
My highest probability scenario for this week would be a retest of the 4104/4138$ area. I’m looking at a BORS setup, but on the short side here. We have to assume first that every major levels above will act as resistance, until proven otherwise. We’ll have to assess daily if the rejection of these levels on the upside shows bulls stepping in, or not!
For a bullish scenario to play out, I would prefer if we get a retest of the 3964$ level early this week before going higher. While a bearish scenario could playout with an early 4104/4138 area rejection.
We STILL live below almost all kma’s, meaning it’s a DEFENSIVE environment for me currently, but it can change quickly if we have a good day and holding above these levels of interest.
Breadth was really good Friday on week close. We had almost 2000 net adv. and stocks >50dma rallied hard over 17% from being oversold at 10% Thursday.
VIX also crashed down almost 10% down to 28%. This is really what we want to see if we want to get a chance to have a good duration rally here. We want to see the volatility get out of this market.
Not a big week for the economic news. We have Retail sales & Powell speech Tuesday which will be the 2 biggest news of the week.
I think more eyes will now be on the economic metrics as they’ll want to see if the last negative GDP release will continue or not. Ringing the bell of a recession. Retail Sales is a big indicator to gauge the consumer appetite & a potential slowing economy.
So, overall, Tuesday will be the day to be careful, as the news able to move the market will happen.
I still think that Energy & Oil sector are the leading sectors. But last week we saw 2 very big & important sectors pointing in the top 3. Biotech & Semi’s are 2 very important sectors that very often lead market advances.
I’ll be looking closely both sectors this week to see if we get follow through action or not.
I’m still monitoring daily the Oil commodity to confirm the sector strength & setups that I see popping in the last few days.
CL_F still looking very good with last week save at the 10wma & the failed wedge breakout. We closed the week unchanged and I’m leaning for a bullish action this week as we might breakout fast of this wedge after a shakeout last week.
Testing the waters carefully after both 3 SPX levels I watched Friday got trigged. I’m still playing very defensive and will not add any positions if my 3 starters don’t get traction and build a cushion.
Remember that specially during a market correction, you want to use progressive exposure to limit the open risk of your portfolio. That way, if the market reject overhead resistance and we got a market wide sell-off, you lose your opened profits, but not you’re capital.
Finance your next position risk with your current profits!
New positions:
SPXL (As explained, I like to open a first indices position on the 5dma breakout, which we had Friday.)
AN (Took the DTL breakout on the BORL setup as shared in Friday FL)
VLO (Took the DTL breakout on the BO10PB setup as shared in Friday FL)
Trimmed positions:
Closed positions:
9 names in the FocusList this week. We have very interesting setups and I see more setups now that we had in the last few weeks, but I still remain very cautious as we are still below most kma’s and the trend is STILL DOWN. One day & one position at a time!
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