We’re well into pre-earnings now, and the markets have inched downwards, giving a different feel to last week.
A couple of large institutions have been talking up a recession as the yield curve has flattened, while the main indices are now all below (the S&P only just) their 200-dma’s.
In the case of the big three indices, each of them have tried but failed to stay above their 200-dma, while the Russell 2000 didn’t even get close to its.
That kind of behaviour is more in line with bearish conditions moving forward.
This is all in slight contrast to this time last week, where the edge was very marginally bullish.
The big test will be earnings, starting this coming week.
So market conditions aren’t optimal right now, but that can change very quickly. Trading (our way) does not have to mean you’re always in the market. You can be (and should be) discerning.
Of course, yes, it is possible to succeed in nearly all conditions, but our speciality is for tidy consolidations in tidy trending market conditions.
When conditions are challenging like now, we’re all in the same boat, and we should embrace being patient. It’s a sign that you’re taking control.
Many other traders out there will have been losing hand-over-fist, blowing up their accounts, while we have been serene and patient as prime candidates from our filters have dwindled. Again, that’s good.
All that said, I will loosen some constraints on the options filters so you can see more potential candidates coming through.
It’s now just two weeks until our Miami Bootcamp … Everything is ready, so now it’s just a matter of everyone travelling safely to Miami.
Remember, the discounted price offer closes before the event, so even if you think you want to pounce on optimal conditions later on in the year, you’re still much better off securing your place now while the deal is still live.
Current Market Behavior:
The longer term slower market timer – my OVIsi – turned back to amber again on Monday. This indicator works best with longer term time horizons. It’s showing a very marginal reading right now, so we have to consider other market timing indicators.
My medium term SPY Swing Timer is still positive and not quite overbought, while the short term timer’s recent bullish arrows are invalid due to the S&P’s negative OVI.
Again, please do not simply follow the arrow signals blindly.
All the indices are below their 200-dmas as we approach earnings.
I said last week that “short term still looks uncertain”.
You could say that again … so I will!
Not so many nuggets today because there are few of them out there, but there should be a significant learning session.
This week I have focused almost exclusively on setups near the Key Levels.
More deployments are imminent in time for Miami!
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.