Support And The 50-Day Simple Moving Average
The SPY was protected by the support and the 50-Day simple moving average when price slipped through, and the Bulls caught it before a full out runaway. Never the less we still have lower highs and lower lows for about the past 2 weeks. I see support in the $240.40 area followed by the $237.60 area. Resistance is the $242.75 area.
Closed Positions
IMFN ½ for a +18.71%
UVXY ½ for a +24.06%
Free Trade Idea – No Free Trade Idea Today
For members, we do have 13 trade ideas that we will cover from our members master list between 9:10 Est. to market open.
From our Members Watch-list
SCSS is up 17.88% from our members only post on June 2; The Bulls moved it 11.32% yesterday.
Hit and Run Candlesticks Trade Ideas -vs.- SPY Last 7 Bars
- HTZ +31.26%
- CARA + 30.82%
- VRX +26.54%
- SPWR + 23.57%
What is a Trade Idea Watch-list?
A trade idea watchlist is a list of stocks that we feel will move in our desired direction over a swing trader’s time frame. That time could be one to 15 days for example. From that watchlist, we wait until price action meets our conditions for a trade.
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Investing and Trading involve significant financial risk and are not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.
Bullish Follow-through is vital.
With the surprising strong move yesterday that it is vital we see some bullish follow-through price action today. There is no question the market as of late has proved it is capable of producing big whips in price, but the ability to follow-through is an important element the market has lacked the energy to do. Will today be different? Only time will tell. Another big question to ponder is how much risk are you willing to take with holiday trading likely to begin tomorrow. As for me I plan to trade smaller than normal positions and will take profits quickly if I do decide to step onto the playing field.
On the Calendar
Thursday begins with a significant number on the Economic Calendar. At 8:30 AM Eastern we get a reading on the 1st quarter GDP. If there is one number this week with the power to make a break the market, it would be the GDP number. Forecasters expect the number to come in unchanged at 2.2%. The question is can the market support these record high prices if the GDP continues show par growth in the economy? Also at 8:30 we will get the Weekly Jobless Claims which are at historic lows and consensus suggests this week’s reading will not change this bullish number.
Other than that, we have a Fed speaker at 1:00 PM and several non-market moving events to round out the day. On the Earnings Calendar, we have 35 companies reporting today such as AOBC, RAD, NKE, MU and CAG just to name a few members should be aware of as they plan the day.
Action Plan
Yesterday was a surprising whip back up on the back of easy money policy in Europe. The VIX is once again testing historical lows and raising the concern of complacency. The SPY is now right back in the narrow range chop zone where it has proved to be very difficult to trade due to the multiple reversal signals it has produced. The DIA and the IWM are looking strong yet still closed under high resistance. The QQQ’s had an impressive day holding support, but the overall the index remains in a downtrend and price is still below resistance.
As you plan the day keep in mind end of quarter window dressing could still be in play. We must also consider the 4th of July holiday on Tuesday and the effect that will likely have on volume moving forward. I would expect Friday and Monday to very light and choppy trading days so plan your risk accordingly. Friday and Monday I have decided that I will be taking off to enjoy my family during the holiday. Of course, I will continue to write the morning note and produce a morning video but other than that plan to be gone. Consequently, the RWO session for Friday and Monday has been canceled. With the market closed on Tuesday well will get back to work with regular schedules on Wednesday morning.
[button_2 color=”green” align=”center” href=”https://youtu.be/VAIF2kaZy8g”]Morning Market Prep Video[/button_2]
Trade Wisely,
Doug
Profit Takers Are Coming Out
Profit takers are coming out in the overall market. Candlesticks patterns and signals are starting to suggest the big bulls are in need for profits, evidence of profit taking can be seen in the SPY, QQQ, DIA, VT, and VTI ETF’s. Candlestick and price action of the SPY suggest the next 2 big numbers are $240.40 followed by $237.60. The Bulls will not likely give in willingly or easy, so we should see minor relief rallies.
Free Trade Idea – UVXY
UVXY (Ultra Vix Short-Term Futures ETF) Became an HRC-RBB chart pattern yesterday with tremendous profit potential. The 3-day chart is set up for our Pinball Strategy. On the 3-day chart.
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Conditions For The UVXY Trade
- Bullish Harami 3-day chart
- Engulfed Lower and Upper 4-hour Band
From our Members Watchlist
SGMO is up 83.16% from our members only post on March 6, after hitting resistance. 83.16 profit or the piece you may have will look and feel good in your bank account.
Hit and Run Candlesticks Trade Ideas -vs- SPY Last 7 Bars
- CARA +51.32%
- IMGN + 33.20%
- ESPR +27.04%
- VRX +23.61%
- DVAX +20.48%
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What is a Trade Idea Watchlist?
A trade idea watchlist is a list of stocks that we feel will move in our desired direction over a swing trader’s time frame. That time could be one to 15 days for example. From that watchlist, we wait until price action meets our conditions for a trade.
MEMBERS ONLY
Investing and Trading involve significant financial risk and are not suitable for everyone. No communication from Hit and Run Candlesticks Inc. is financial or trading advice. All information is intended for Educational Purposes Only. Terms of Service.
Rick Saddler is not a licensed financial adviser nor does he offer trade recommendations or advice to anyone except for the trading desk of Hit and Run Candlesticks Inc.
Price Action Favors the Bears, But?
Price action certainly favored the Bears yesterday as the market sold off into the close and smashing through support levels. Normally we would expect to see more selling at the open today, but this choppy market is far from what I would call normal. Whipsaws can happen in either direction, and we certainly know this market has the willingness to whip. Also, keep in mind the possibility we could see a little end of quarter window dressing as we wind down the week. I will continue to expect very choppy and whippy price action so keep a close eye on the price action.
On the Calendar
Hump day begins with the International trade in goods report before the market opens at 8:30 Am Eastern. The April number deepened the deficit by 3.5%, but the consensus is expecting a slight improvement for the May number. At 10:00 AM we get a reading on the Pending Home Sales Index which is expected to improve by 0.5% this month. At 10:30 we get the EIA Petroleum Status Report which will likely be most watch number of the day. Supplies have been in decline but not fast enough to improve oil prices just yet. A continued draw down will be important for the overall market.
On the Earnings Calendar, we have 24 companies reporting today. MON and PIR are among those reporting and may be the most noteworthy for our members. It is also wise to keep in mind as the end of the quarter approaches watch for the possibility of window dressing which could begin at any time.
Action Plan
The afternoon selloff yesterday made a mess of the index charts. The SPY is very close to testing the 50-day average while the QQQ’s closed below the 50 for the first time this year. The DIA is currently the strongest of the indexes failed price support yesterday as did the IWM painting a pretty bleak picture. However, we are close to the end of the quarter which is often the time we see the institutions do a little window dressing before they close the books. Logic would suggest we see more lows today, but we should keep an eye our for a possible bounce that could begin at any time with that window dressing in mind.
My SPY hedge position at the end of the day was showing a very nice overall gain due to yesterday’s selling. As this position is entering its heavy Theta Decay period, it would be in my best interest to exit the position very soon. I will be watching the SPY closely this morning with that in mind and may take the profits today. Before adding any new trades, I will need to see some buyers stepping I to support current prices. I must also start watching for stocks setting ups short trades and begin building that list to prepared if we start to see a full on the shift in the overall market trend.
[button_2 color=”green” align=”center” href=”https://youtu.be/LJtJiwKPZjw”]Morning Market Prep Video[/button_2]
Trade Wisely,
Doug
Cash is a position often underutilized.
As short-term swing traders, we often get caught up in the idea that every day is a good trading day. Yesterday should have proved that idea to be untrue. Sitting in front of our computers, we get bored and feel the need to make trade decisions even when the market is proving to chop up our accounts. The problem is, most traders underutilize the decision to remain in cash. Cash is a position, and in times like this, it can be the best possible trade decision. If you find yourself tired of getting chopped up in this whippy price action losing back to the market your hard-earned profits, perhaps it’s time to stop trading. There is an old saying, if you find yourself in a hole then stop digging!
On the Calendar
Tuesday begins with the S&P CoreLogic Case-Shiller number at 9:00 AM eastern time. CoreLogic is a home price index tracking monthly changes in real estate values. Gains so far, this year have been strong, and forecasters see the April number increasing by 0.6%. I wonder how much longer we can see prices increase while real wage growth continues to lag way behind. At 10:00 AM we get a reading on Consumer Confidence. Customer attitudes on the economy have been falling back from post-election highs. Consensus suggests yet another move lower this month. Although these reports are important, they are unlikely to move the market unless they issue a number that surprises the market.
We have 2 FED speakers during market hours today with one of them being Janet Yellen herself at 1:00 PM. On the Earnings Calendar, we have 20 companies reporting earnings. A couple of note that members have been trading are KBH and DRI.
Action Plan
My warning of caution with the gap up open yesterday turned out to valid as the market issued a very cruel whipsaw to those who chased in emotionally. The DIA clung to price support, but the SPY’s reaction to price resistance pushed the index back to lower range of the chop zone, now in its 18th day. The QQQ left behind the most bearish pattern of all the indexes with a dark cloud cover pattern right at resistance. Surprisingly, IWM turned in the best performance of the day resisting sellers and closing just above resistance levels.
Futures are pointing to a slightly lower open but not nearly as much as I would have expected based on yesterday’s performance. I think there is a very good chance we remain stuck and very choppy. Yesterday should be yet another proof how dangerous and potentially damaging to your account choppy markets can be. I will continue to exercise caution favoring capital perseveration over risk until the price action shows improvement. For me that means more standing aside watching and waiting. When I do trade, they will be smaller than normal positions sizes. Always remember Cash is a position!
[button_2 color=”green” align=”center” href=”https://youtu.be/21SUfd0ZdIg”]Morning Market Prep Video[/button_2]
Trade Wisely,
Doug
