Trader Mike's Notes
A fresh all-time high and it popped up on the Bollinger Band Squeeze and Touched the Upper Band scan tonight. This could easily turn into a walk up the upper Bollinger Band.
I found this and a few other financial stocks on the Expansion Pivot Buy Setup scan this weekend. (That scan essentially boils down to a stock rising above its 50 DMA with a wider than normal intraday range.) These stocks have been severely lagging the market but the action of Friday makes me sit up & take notice. JPM also appeared on these scans on Friday: Stochastic Buy Signal, Crossed Above 50 DMA, Crossed Above 20 DMA and 180 Bullish Setup. Definitely worth keeping an eye on. Upcoming earnings is a wild card though.
I really just want to mention the breakdown in the % of Stocks Above Their 50-Day Moving Averages (graph of that is on the General Market Overview page) today. A couple of weeks ago I wrote about how overheated it had become & mentioned the 65% level. Well today it slid from 77% to 64%. So clearly some of the froth has come out of the market. It seems like all the major indices, other than the Nasdaq, are in for tests of their own 50-day moving averages. Bulls will *really* want those levels to hold. The indices being so close to their 50 DMAs will add some exta drama to the upcoming earnings season.
Another one from the "Non-ADX 1,2,3,4 Bullish" scan. I also like that it's trying to find support at its 50-day moving average. This chart gives pretty clear-cut stop loss levels (the 50 DMA or today's low) and a price target (if that's your thing) of the June high.
One of tons of stocks on the "Non-ADX 1,2,3,4 Bullish" scan today. This stood out to me because it's also now closed its post-earnings gap from the end of May.
The melt-up we've been having came to a screeching halt today. The S&P 500 has given back about 3 weeks' worth of gains yesterday and today. Yet it's still solidly above its 50-day moving average.
Speaking of 50 DMAs, many of you know that I always keep track of the % of Stocks Above Their 50-Day Moving Averages (graph of that is on the General Market Overview page). I use that as an overbought / oversold indicator. I find it to be more useful to identify oversold than overbought conditions but once it rises into the mid-70s I get a bit worried about the market being overheated. Well it jumped above 80% a couple of weeks ago and even got above 90% last Friday! Today it plunged down to 75% as many stocks were driven back below their 50 DMAs. I view that as a healthy development (for now) as the action in many stocks had gotten ridiculous and this selloff is wringing out some excesses. My bullish side would like to see this indicator stay above 65% over the next few weeks. I'm building up a wacthlist of stocks I'd like to buy at or near their 50 DMAs
The Russell 2000 is the first of the major indices to slip back below its 200-day moving average. It's also notable that the financial ETF (XLF) is also below its 200-day moving average.
There are a few airlines on the Non-ADX 1,2,3,4 Bullish scan today. That gives a nice, clearly defined stop-loss spot (under today's low) -- assuming they trigger entries. -- Edit, the next morning during pre-market trading: The airlines are gapping down significantly so I'm pretty sure none of those setups will trigger entries. (The trigger for that setup is trading above yesterday's high price)
A dead cat bounce or the start of a lasting rally? I won't pretend to know. What I do know is that the indices have now come from having very oversold stochastic readings and sliding down their lower Bollinger Bands to now having overbought stochastic and touching or almost touching their upper Bollinger Bands. That tells me the *easy* money has been made. It does feel like we're back to a more rational market & I look forward to seeing what the scans turn up in the coming days.
This isn't necessarily a Google note but I wanted to mention that it, along with a lot of other *historically quality* names, is showing up on some of the oversold scans. If you're a long term investor and looking for some bargains, those are great scans to run in times like these. I like to sort them by Grade (relative strength) and see what names I recognize which are rated A or B. A great way to build a watchlist
This is more of a general note than one specific to IWM. This and the Dow broker their 200-day moving averages today. All the indices are now well below their 50-day moving averages. The volume on these last few down days has been very high. For those newer traders who have never seen a decent sized decline and only know how to buy dips, it may be time to change your tactics.
This (as always) is a good time to review the General Market Overview page (in the Research Menu). I haven't trusted the rally this year because it's had poor breadth. That's very clear in the "% of Stocks Above Their 50-Day Moving Averages" indicator on that page. While the indices were cruising to all-time high after all-time high, that indicator showed that only about 50% of stocks were even above their 50-day moving averages. That kind of rally usually doesn't last for long.
THis is why I love the "Hot IPO Pullback" scan! Up over 70% since that his a few times last week
This is going absolutely nuts! It triggered the Parabolic Rise signal today, which I created to find potential shorts. And I shorted a tiny bit of TSLA just before the close. I *think* this will be lower in a couple of week. I just hope it doesn't hit my stop first.
The best development I saw today was this move by the small cap index. It's finally joined the larger cap indices in making a new 52-week high. This is helping the breadth indicators to look a little better and give a bit more legitimacy to the market's strength (IMHO).
The market remains a sloppy, news/headline/tweet driven chopfest. Tonights headlines will make today seem like a great win for the bulls but the thing that screams out to me is all the bearish shooting star patterns made today. The market sold off pretty hard in the last 30 minutes, causing the indices to close near their lows for the day. I'll be on the lookout for continued selling on Monday.
So we got the *easy* bounce back to the 50-day moving average. This now looks like the 50 DMA will become resistance. Of course, in this market environment one (seemingly) bullish tweet can send the market flying, so I won't put too much faith in the technicals acting like the *should*.
I'm seeing quite a few setups like this tonight. This is one of my favorites -- looks like an orderly pullback with, so far, a successful test of the 50 DMA. Stochastic reached oversold today, it made a hammer / bullish doji... what could *possibly* go wrong? ;-)
I'm always trying to stress to people how important it is to get a read on the broad market. That's why the General Market Analysis page exists. Lots of bearish stuff on display there these days. Today it shows that the Wilshire 5000 -- one of the broadest indices there is -- broke its 200-day moving average. It joins the Russell 2000 and Dow in that respect. The table at the top of that page also shows that the S&P 500 (SPY) bounced off its 200 DMA today. You'll also see that ADX/Directional Movement is trending down strongly for QQQ and DIA. So the trend(s) are clearly down right now.
If you're looking for long opportunities I hope you realize that you're fighting the trend. If you're not comfortable playing the short side, remember that cash is a position! And it's often a great place to be. You can build your watchlists and preserve capital so you can trade in easier market environments.