Back in November I talked about the prevalence of whipsaws and how that made for riskier conditions and potentially bearish market intent.
We’re seeing it again – for understandable reasons given the geopolitical context and the spectre of inflation that seems to be a moving target.
If you observe how the S&P has behaved since it penetrated its 200-dma to the upside on 31st January, it has hardly been the neat and tidy action that we like to see for a sustainable bullish resumption.
In fact the day ranges continued to be wild, and the whipsaws continued.
Leading to Friday’s slicing back down through the 200-dma.
It begins to resemble … a waterfall! But an ugly waterfall. Not the lovely type that consolidates neatly below its 200-dma!
No, this one has been messy, and is highly dependent on further news coming out of Eastern Europe.
So, where does that leave us?
We continue to “Trade What We See”.
Where we see neat setups we can approach them with stocks or options strategies.
Where we see a mess, it’s best to let the gamblers play with those ones.
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Current Market Behavior:
The S&P has sliced back down through its 200-dma which is bearish behavior. My S&P Swing Timer is now slightly positive but not overbought, so right now it’s not impacting a decision for us. There is plenty of scope for more downside.
Do not use the Market Timers as blind signals. There is a certain discretion to be deployed with these, as I mention in today’s video, and I’ll record a tutorial on this soon.
Market Outlook:
Last week I mentioned that many commentators were calling for a V-shaped recovery probably because it served their interests to say that, while I wanted more confirmation …
I was right! We got the opposite of confirmation, and recent lows look likely to be tested at the very least.
Rotation from tech to cyclicals continues.
Energy stocks are bullish but getting to overbought levels, which they can exceed, but only for so long.
Travel stocks like airlines and cruise liners suffered on Friday.
Stock Selection:
I’ll say this nearly every week, but again, focus your energy on consolidations near Key Levels, with other Big Money Footprints in evidence. You’ll get bigger odds on your side, and you’ll be able to manage your trades effectively to control your risk.
This applies also to options traders who like some adventure.
Application:
One of the first Fast Filters I gravitate to is simple consolidations.
Software Upgrades
Further tweaks are ongoing. For our options traders, I deployed new filters for larger leverage multiples as we discussed recently. You can now filter for ‘Good’ Leverage stocks with cheap options. I will soon create the Fast Filters for these, so you can access them in one click. And you can always tweak them to create your own unique Fast Filters too.
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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.
