Recap on yesterdays market action:
- SPY closed up 2.52%
- QQQ closed up 2.33%
- Dow Jones Industrial closed up 2.15%
Today was a good start to the market rally and recovery but we still have a lot of ground to cover before the bear market is truly shook. As for market news we still have the Fed Chair speaking Wednesday and Thursday and this may have an impact on the markets.
SPY broke back above the resistance trendline (support lines become resistance once they have been broken). Even though SPY broke above the line it did so on below average volume and started to fade into the close. If SPY can base above the trendline for a few days and then stage a rally that would be very productive.
QQQ never broke below its support trendline, however this does not mean that it is performing stronger than SPY. Today it was up on below average volume and also faded into the close, closing about halfway through the daily range. Similarly to SPY, if QQQ could base for a few days and then advance on volume that would start to signal a rally.
GOOGL triggered a buy today when it took out Wednesdays high with volume. I considered opening a small position but missed the alert and by the time I saw it GOOGL had advanced approximately 1% past the buy point. Even if I had opened a position I likely would have sold partial shares (20% of position) near the high and more shares (50% of remaining position) when GOOGL came back to my buy point. This market is very choppy and thus makes take partial profits quickly essential. As of now GOOGL needs to take out the June 10th high with volume to be considered a buy.
TSLA is acting slightly stronger that GOOGL at the moment. Also advancing past Wednesdays high with volume although we did see a fade into the close. Similarly to GOOGL I had planned to buy taking out the highs but missed the alerts (I was occupied with a meeting). TSLA did form a downward sloping trendline that may provide an entry if it is taken out with volume and a good market.
Overall, todays price action was constructive but no enough to become extremely bullish. This is simply one step on the long road to a health market. The indices may setup up for an entry but profits need to be taken quick and losses even quicker. As for individual stocks that show high probability setups they are few and far in between. My true favorites are currently only GOOGL and TSLA, more may soon be added to this list. Stay focused and watch your stocks because the market has the ability to turn quickly.
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