Conditions Continue to be Dangerous for Swing Traders

And so, as with the past two weeks, I could entitle this week’s broadcast with something to do with “whipsaws” and “earnings”!  

Once again the S&P bounces off its 50-dma after a dramatic retracement.

The implications of this are that many stocks will have whipsawed even more dramatically. Many stocks will have broken out only to pull back, stop out and rebound straight back up. QCOM, SNOW, and countless others.

Now, what this means is that conditions are tough unless you’re a long-term buy-and-hold investor (and I think that stance is going to get uncomfortable soon too) or an intraday trader who isn’t holding any gap risk. Gap risk is essentially overnight risk.

Given that it’s earnings season it does make for extra risky market conditions, so my typically fussy instincts are on Super-Fussy right now. 

Yes, there are big moves happening right now, but I’m only interested in the higher probability setups in higher probability market conditions. 

In the next few days the likes of Apple, Google (Alphabet), Facebook, Microsoft, etc are reporting earnings, and that will give a new indication for the coming weeks.  Many leading tech stocks are already overstretched, but that doesn’t mean they cannot rise still further.  The fact remains we do not chase.  

In today’s Market Review I have a mix of promising setups plus some others that are more designed for learning.

Worth noting is the difference between the mid caps where the Russell 2000 bounced off its 200-dma on Monday, vs the large cap indices which are powering on toward new highs.

I cover that in the review as well. 

Market Outlook

In terms of market timing right now, the OVIsi longer-term indicator is still green, while the medium-term timer is currently neither overbought nor oversold. I’ll leave out the shorter-term timer for now as it’s likely that I’m going to tweak it to make it more sensitive.

The very most optimal condition is where the medium term indicator becomes oversold and we find bullish stocks in those circumstances. Otherwise where it is persistently but moderately bullish.

Remember, overbought is above +0.80 and oversold is below -0.20 for the medium term indicator, and it didn’t show oversold for this last little dip, while it did for four out of the previous five touches of the 50-dma by the S&P 500.

Over time, these market timers are going to be incredibly useful, and it’s just a question of living with them for a while.

Again, the idea is higher probability trades in a higher probability market. 

Software Upgrades

In today’s broadcast I’m showing you the upgrades to the OVI Markets Daily service which have just been deployed. In today’s video I’m giving some attention to the Medium term oscillator as well as the longer term OVIsi.  

For our options Bootcamp members, we will have a Mastermind session in the latter part of August, where I will showcase our new tools.  

My new laptop has just arrived, and once it has been set up properly I’ll also be populating all of the OptionEasy TradeFinders with new FastFilters.  I’ve done FlagTrader, and the others will follow soon. 

Again, later on this year I’ll then focus on the big project to align our charts, Watchlists and TradeFinder applications.

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This week’s market review is again more for observation.  This is an important week for earnings, and while I have mentioned a couple of pre-earnings plays, do bear in mind they are higher risk plays.

PS. If you’re interested in any of our OVI trading services for stocks or options such as a fast-track mentorship or workshop event, book yourself an appointment here to speak with us. Many of our members aren’t aware of all the services we offer to help you become an established consistent winner with the OVI. Remember, everyone is an individual, and we ensure that we can cater to you and your particular needs.

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