Quick Summary:
Market leaders and SPY get hit hard, reversing yesterday's big gains. Overall a bearish development and increases chances of August lows retest. Key SPY levels are lows and 50 dma. Keep an eye on strong stocks like current positions $PANW and $TKMR along with $TWTR, $NFLX, $AUXL and $GMCR. New earnings breakout list starts with $RT and $ZUMZ.
Video Analysis:
No video today. In the blog there is a video on the GS short setup.
https://blog.bullsonwallstreet.com/the-anatomy-of-a-winning-trade-shorting-goldman-sachs/Key SPY Pivot Levels: Round number $200, Old high 201-202, 50 dma 197.01, 100dma 195.12 , gap 193 pivot lows 190-191
Under the Hood and Trading Game Plan:
You must be willing to adapt, especially in this helter-skelter market. $SPY have up all of yesterday's gains today, and did not on very high volume. The one positive is that the low of the recent range did not break.
So how do we adapt now? The best thing to do hear is to stay out of the way, manage positions and keep the rest in cash until we get a clue. There are two areas we can get long, a break of the dma or a pullback to the August lows. Right now I believe the August lows are more likely due to the fact that these violent reactions are in the midst of a short term down trend. I may even consider an index short on some strength in SPY tomorrow.
My current game plan is to manage my two positions, possibly short SPY (via SPXU) and for the rest play it safe until we have clear signals.
Current Trades
I am currently holding $TKMR and $PANW. I was stopped out of $DIG today.
$DIG got hit like the rest of the market today and my stop was hit for a small loss.
$TKMR and $PANW held up well today. Why is that, when just about every other stock was hit hard? When searching for hammers at the end of the day Thursday, I was on the look out for those with the strongest setups that were showing positive accumulation. These two stocks fit the bill and are likely why they held up. Other stocks from the focus list that held up were all stocks showing strong relative strength and volume going into the day--MNST, TWTR, NFLX and GMCR.
Although we are not looking to trade much of the focus list right now, earnings season is upon is and I am compiling an earnings breakout list just as I did last quarter. The first two entries of this season are $ZUMZ, $IPXL and $RT.
The Trade Results Journal/Spreadsheet is up to date
The Focus List
As of now, we are limiting the focus list to the above mentioned stocks. Obviously if conditions change intra-day I will send out an alert with other stocks.
Market Leaders
GS, GOOGL, GS, CAT and FB followed the market with 2+ percent losses. GMCR formed an inverted hammer that suggests pullback. TSLA and NFLX handled the day nicely in the red under 1 percent, but I still would be weary of any entries.
Please read the post 23 Laws of the Part Time Swing Trading the Market Speculator Way and How to Anayze Your Swing Trade Results It is important to know these rules if you trade off the Report.
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