Quick Summary:
SPY breaks below old high $199 and sitting at $198. Thoughts on overall game plan. Review of SPY using inverse ETF SPXU.
Overall Game Plan:
Friday's note still applies: This is one of the strangest markets I have traded in the past 8 years. There is little excitement about being at new highs, which there normally is. Why is that? It is because few stocks are participating. At this moment IWM is a better indicator of how most stocks are doing right now.In the near future, I am going to change my approach a bit. First, I am not going to let my market analysis come into play with my individual stock trades. Due to the extended nature of the market, I have been quick to take profits. I will switch over to some of my shorter term setups. Finally, I am going to be very selective with trades. For those that want to trade more, I will post daily updates of setups that are available for those that want to take them.Key SPY Pivot Levels: Round number $200, Old high 199, 50 dam 197.54, 197.50 and $196.50 gap fill and support levels
Under the Hood and Trading Game Plan:
Today $SPY took out $199 and is sitting right at $198. The 50 dma is within reach. If that breaks we could test the August lows at $190. That's not a given, and if it does happen there could be some back and forth on the way down, especially around the 50 dma.
Rather than stare at SPY as we do everyday, let's change it up and look at the inverse ETF I am trading to short SPY, $SPXU. For those who have trouble shorting, this makes it easy since you view it as a long trade. If it looks good as a long setup, this confirms that your short setup is good.
The overall volume pattern is good and it does have the feel of a bottoming formation. Stochastics are not yet overbought so there is room to move until we get into overbought territory. Gap fills are at $45.78 and $46.50, which provide targets. If we reach the second gap fill we will have remounted the 50 dma and the August highs would be within reach.
I will continue to manage the $SPY short (via $SPXU) and be *very* selective with long positions. It's best to be cautious until we see some signs of buying.
Current Trades
I am holding $SPXU and $FEYE.
The Trade Results Journal/Spreadsheet is up to date.
The Focus List
For the most part I am waiting for momentum stocks like TSLA, YY, YELP, BIDU to drop to strong support levels as they get extremely oversold. I will let you know if and when they get there.
ZU showed strength on a day that few stocks did. I like it on a slight pullback.
MNST continues to trade within the post-breakout range.
Market Leaders
These are not necessarily stocks leading the market, but stocks I watch as an indicator for strength in the market and sectors, and use for as individual trades.
$CAT ad $GOOGL are near support levels. These could be played as low risk bounces. FB defied the market today and is right up at highs.
Please read the post 23 Laws of the Part Time Swing Trading the Market Speculator Way and How to Analyze Your Swing Trade Results It is important to know these rules if you trade off the Report.
New subscribers and trial members please leave me any feedback/comments in the comments, via email (singhjd1@aol.com) or twitter (twitter.com/PaulJSingh).
