Recap on yesterdays market action:
- SPY closed down 0.38%
- QQQ closed down 0.73%
- Dow Jones Industrial closed down 0.20%
- VIX closed down 1.10%
The major indices all gapped up to open and quickly gave back their gains to close slightly lower on the day. Although many stocks closed down for the day this was still a constructive and much needed rest after last Friday's large gains. With that being said, don't get overly bullish just yet. We still have a long ways to go before the market shakes off the past few months.
SPY ran into the 21 day exponential moving average (orange line) right at the opened and quickly reversed. This was not an extremely strong reversal however, with volume lower than Fridays run up and the average daily trading volume. What would be most constructive is if SPY ranged here for a few days to a week and then looked to advance even farther. SPY could also setup for a high-low by trending downwards slightly and then taking out todays highs. Conversely, if we see strong selling in the next few days this may indicate more downwards action.
QQQ behaved similarly to SPY, however, QQQ actually gapped up above its 21 day exponential moving average (orange line) but still closed slightly below. A week of range trading or even a slight downward trend would be constructive for QQQ as it would give some time before attempting a new advance.
Recap on recent positions:
Before the close on last Thursday I opened two small positions in AMZN & QLD. Both performed very well and Friday and today I was stopped out of both positions.
My first shares of AMZN where bought at the pivot point shown by the yellow line. This was at the close of Thursday and as prices began to advance on Friday I bought a small amount of additional shares. Today I sold out of this position for a moderate gain of 1.80%. This is not an eye popping gain but in a choppy/whipsaw market I find it best to take smaller profits.
QLD also turned out to be a nice buy into the close on Thursday. There was a slightly better base/enter here so my initial position was slightly larger. Again, with Fridays price advance I bought additional shares throughout the day. Today I also sold all of my shares for an average gain of 4.30%. Could I have held to a few shares? Yes. Will I regret not? No. If QLD continues to advance there are several additional entry points possible.
Potential Setups:
Looking forward there are not many stocks that currently have high probability setups.
GOOGL was discussed previously and has approached a month long base. If GOOGL can break above the highs set today with a large volume increase this could be the beginnings of a good run.
O is also approaching a monthly base. This is very similar to GOOGL with the only difference being the O is a realty trust and thus may move bit slower in price increases.
Overall, market conditions are improving marginally compared to what they were two weeks ago. With that being said conditions can change quickly and price could revert to new lows. All we are able to do now is to create a list of potential stocks that are setting up or close to setting up. Market conditions still have a long way to go but always have to start changing somewhere.
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