MARKET COMMENTARY– Under the backdrop of another stimulus package and analysts setting a low bar through the earnings cycle, stocks and markets are holding higher support as they stretch to move higher. The US dollar has bounced dramatically, bringing the Euro move skyward a bit back to earth. Apple remains one of the few leaders in the space holding its new highs. Holding the 3257 retest gives us more upshot strength and we hold steady above this region so far. It will be our line in the sand until/if broken. Charts could jolt sharply but pullbacks, both deep and shallow, will remain regions to buy as long as the markets hold liquidity.
Retracing to higher lows once more implies the grind higher is intact. We now show a resistance edge of 3284. The Nasdaq continues to be weaker than the rest of late. When leaders lag, we also see a cautionary tone.
REDUX-Divergent undercurrents still exist- we remain range bound by my estimation but with a clear upward draft. We will have intraday longs and intraday shorts and we will continue to take profit rather than wait for continued upside pressure. BE CAREFUL shorting between major targets – the markets are still bullish.
From Bloomberg -“The S&P 500 and the Dow futures were muted with lawmakers at an impasse about a coronavirus relief deal, while investors remained cautious after Fitch revised its U.S. outlook to negative. European shares rose, lifted by German stocks after the country reported an expansion in monthly factory activity for the first time since 2018. Asian equities ended on a mixed note. The dollar rose due to its safe-haven appeal, while spot gold prices fell on profit-booking. Oil prices slipped on oversupply worries. The U.S. manufacturing PMI data is on the economic radar.”
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If you find yourself being chopped up, widen your time frame or take time away from your screens. This is a time when less is more.
TRADING VIEW & ACTION PLAN
We are in trending breakout but without a signal of strength. This is a cautious long grind with lots of candle retracements. As long as we hold or recover the area near 3246.5 (holding at this writing), we remain in a path that shifts us north and we are much more likely to trend back into 3300 and beyond, else we slip back into the shorting zones and supports in our range near 3188 and lower. Remember that we have no strength signals -we should be careful not to add to positions that do not move properly into targets.
Intraday LONG trading from support edges like ABOVE the VWAP or tight moving averages will give you the least risk event for engaging – removing your trade at resistance will allow you to participate – understanding that countertrend bounces can be swift and sharp but will likely fail under the broken structure of the market.
Intraday SHORT trading from resistance edges like the old highs or bigger moving averages will give you the least risk event for engaging. Follow the candle trend until candles stop breaking higher.
Here’s a link to the METASTOCK software– you can have your own copy of Metastock to run these tests and setups using Target Rich Trades.
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