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For the last three weeks I’ve mentioned the markets being overbought and due a slip, even specifying to their 50 and 200 Key Levels … and yesterday they got there.
When professionals ask how are we’re able to be so accurate, I get them in an even bigger fluster when I say “We don’t use any macro-economic data”!
Go to any banking conference and you will be subjected to hours of macro-economic observations and what that might mean for the markets. Sometimes they’re right, sometimes they’re not.
But there are two big problems with only using macro-economic:
- Timing is still a challenge for them
- It increases the likelihood of confirmation bias.
Confirmation bias is when you have a pre-existing strong opinion or belief, and you steer any other observations to fit your bias, even if it means something completely illogical.
At WiseTraders we focus on how supply/demand movements might influence the price of shares. And we only ever ‘Trade What We See’.
And what we see is our very own, and unique view of ‘Big Money Footprints’.
By doing this, we have little to no vulnerability to confirmation bias and the damage that it can cause.
And these are the skills I want to help you with, which will also save you a ton of time!
Last week I also mentioned the quality of setups was quite poor. That’s often a sign of slipping prices to come.
Now we’ve reached those Key Levels, what next?
Overall it looks like the markets are weak, so I do not expect a strong bounce from here right now, but there is likely to be friction around these Key Levels.
One of my important indicators is slightly oversold, but can remain like that for a while. None of my other bellwether indicators are oversold right now, so it’s likely that the S&P will ultimately slip below its Key Levels.
Watch the video for more detail.
The Main Indices:
Here are my words from last week (they all did exactly what I said would happen):
The SPY showed some fighting spirit on Friday but it’s likely to hit its 50-dma before it makes a new high.
The QQQ is likely to drift to its 200-dma (and perhaps lower) before making new highs.
The IWM is showing remarkable resilience, but is likely to emulate its more illustrious index rivals.
So, what about this week?
The SPY is likely to remain weak. I don’t expect a bounce just yet, but it is right at its 50 and 200-dma Key Levels, so some friction is likely.
The QQQ is likely to make contact with its 50-dma before any talk of new highs is likely.
The IWM is a whisker away from its 50-dma, and I’d say the 200-dma is likely to also be tickled in due course.
- Longer Term Market Timer (OVIsi): Still half-green and will continue this week.
- Medium Term Swing Timer: Just in the oversold zone, but a quick meaningful bounce for the S&P is unlikely.
- SPY OVI: Wobbled into deep negative territory, increasing the odds of further downside.
Sideways to lower movement with looks most likely, though not without some friction around these Key Levels.
Fast Filters Stock Selection:
Last week I mentioned that the previous two weeks had produced less “nuggety” stocks … first due to many stocks having been overbought, and second due to many still trying to find a base. My guidance to ‘not chase’ would have kept you safe, again!
This week there are only a small number of consolidations, which tells its own stories. Most of the attractive setups are bearish, and I typically like to focus on setups near their Key Levels.
Here is a smaller list of stocks that look interesting for our consideration, though several need a couple more bars to constitute a proper setup. Remember to reference the video so you know what my sentiment is on each one:
ABBV ALB ALLY ARES ARKW CEG CME COP CVX EBAY EL FLEX HQY HUBB KBH LMT MTDR MUR NFLX NOV NTES PHM SLB SPG SQM TPR UBER VIPS XOM ZM
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Remember, you can play the video at 1.25x or 1.5x speed if you want to save time! I have placed all the stocks covered in today’s review in your “Latest Preview” watch list.