Hi Everyone
Cash is King for Now in the Stock Market …
So the market really needs to make up its mind, don’t you think?!
Sometimes the market can get a bit like this – churning and churning and then … BAMMM … off it goes in one direction. At these times you must keep watching. Trading is so much about watching and the pouncing when the most obvious opportunities present themselves.
It’s very much like hunting. Ask any hunter (or predator) and you’ll learn that most of what they do it observe … until it’s time to pounce. Right now is a time for observation. But rest assured, the time to pounce won’t be far away. Like the animal kingdom, the ultimate predators prey on the weakest link. It’s survival of the fittest, and that’s exactly what trading SHOULD be like. You wait until you find a completely OBVIOUS candidate.
Most traders’ flaw is that they simply don’t have the patience to wait for the obvious candidates. With our method of trading, and the fact that it’s so fast to execute, there’s really no excuse.
Let’s go through a couple of charts, starting with the indices:
QQQ
The QQQ looks weak and is an “avoid” right now. The OVI is continually negative and the way to trade this is only if we get a bear flag forming soon. For now, just observe – this is looking bearish right now but doesn’t have an obvious entry point.
SPY
Look at the OVI spiral downwards. A bear flag here would be so helpful … THEN I’d be interested in a short.
QCOM
No pattern here but look at that positive OVI … keep this on your radar … if the market decides to move up, this one will probably be in amongst the leaders.
PCLN
This superstar stock has lost around 10% in the last month and could shed some more if it pops below the support of $487.
NOV
A bull flag and positive OVI … is this a mirage?! Needs to get above $74 for this to work. A bit risky in the face of a bearish market but you can’t argue against this pattern or the positive OVI.
RXII
Penny drug stock. That should have alarm bells ringing if nothing else! But it’s forming a neat cup and handle and while the OVI is barely readable, if we get above $1.50 or the late March high, this could be a “punt” for the more adventurous.
Conclusion:
Much as I said last week, sometimes the markets simply don’t want to play. That’s their way of telling us to keep our powder dry. The good times (up or down) will return soon enough. No need to gamble in the meantime.
More soon …
All the best
Guy