It was another great week for the bulls and short sellers seemed to be punished extra this week with some spectacular moves in individual stocks. The video below takes a look at trends, key levels of support and different scenarios for the market. Markets trends only end badly for those who fight trends, chase trends or ignore good money and risk management principles. Don’t be part of the “dumb money” have a plan and be disciplined about implementing it!!
Markets showed some volatility this week but the mantra of “innocent until proven guilty” continues to be the objective way to look at the trends. Markets can correct by pulling back in price or they can correct through time. Time corrections are a period when we become more selective in new purchases and monitor key levels of support to measure the health against. Do not let news headlines influence your decision to enter or exit a position, it is impossible to ignore news and not have an opinion of it but markets simply do not care about our opinions.. The truth is in price.
The correct focus for these markets continues to be to monitor the health of the rally by the ability of support levels to hold, not to try to pick a top. The market has given us clear levels of meaningful short term support and as long as those levels hold, the trend remains intact.
Key levels outlined on the charts below are $SPY 15515, $QQQ 6835, $IWM 9315 and $SMH 3530 A break of these levels would be reason to be more cautious as it would likely lead to a somewhat deeper pullback. Even if support is broken, the primary uptrend on longer term timeframes remains intact and should be viewed as a pullback only until proven otherwise.
After the volatility we saw 2 weeks ago it appeared some consolidation was due for the markets but buyers showed up once again and longer term uptrends continued to exert their strength. The higher we go it seems that more people are focused on picking “the top.” The correct focus should continue to be objective observation of the market action for clues of weakness and to manage risk, but that is ALWAYS our job, to manage risk!
The market outlook continues to be bullish and the video below outlines some crucial levels of support in $SPY $QQQ $IWM $XLF $SMH to measure the strength against. A strong uptrend doesn’t mean throw caution to the wind and just buy anything at anytime, we still have to be aware of low risk entry levels and not expect to be
Markets are still in a clear longer term uptrends and are presumed innocent until proven guilty with the rising 50 day moving averages. This week we had our first closes below a declining 5 day MA for most of the averages which makes the near term trend more uncertain.
Since the beginning of the year, markets have held up above a series of higher lows which have been the basis of our bullish outlook. This week that series of higher lows was violated and it indicates the markets will need to heal a bit before we know if the longer trend can re-exert itself. The video below takes a look at key levels and potential scenarios for the week ahead.
Trends remain higher and levels of intermediate term support moved up once again this week. I will be out on Friday and the video below outlines key levels of support for the market to hold for the buyers to remain in control. As emphasized in the video, if we see a break of these levels it will not turn the markets bearish, only more neutral in the intermediate term and we would have to watch the action further for more clues as to what is next. Until then the trend is your friend.
The primary trends are still higher and while it is tempting to think the market is ready for a more meaningful pullback, there is zero evidence that a larger pullback will develop. Of course that doesn’t mean we should just blindly trust the trend, it means that we need to remain focused on price action and monitor key levels of support in the averages and more importantly, in the stocks you are involved in. It is tough to trust a market to continue to add to its gains when trends have become stretched but as long as key support levels hold the buyers continue to get the benefit of the doubt.
The markets sold off down to key levels and, while the primary trend remains higher, the intermediate term trend tells us that it is a good place to become cautious. It appears that the markets could see some further selling this week and the video below outlines some possible places the market may sell down to if support levels do fail. A scenario for $AAPL to take out the post earnings low and then bounce higher is also included in this video.
We will delve further into these topics along with general market questions and analysis of subscriber stocks in tonight’s webinar.
