The Holiday Markets: Markets close at 1:00 on Friday. This will likely result in a flurry of trading in the morning and then very light volume trading after about 11:30.
SPY, QQQ, DIA, IWM: The market watch 4 are all the in the same state – a free fall. Not a panic, but simply very comfortable with going down. The reason we followed the markets down with a short position on Wednesday, but did not follow the breakdown on Tuesday was due to the amount of consolidation before the drop.
On Monday the markets dropped after consolidating for the better part of the prior two days, and closed near support. Because of the support and lack of consolidation at their levels, we did not correctly did follow the breakdown that failed as the markets tested the support.
By the start of Wednesday, the markets had again consolidated for about 2 days leaving them very susceptible to any negative news being able to easily push them lower. That is what happened, and the reason we followed the breakdown.
Friday, with a short trading session, and coming after a significant trend down day on Wednesday is not as easily to call. The markets closed on their lows and in an oversold condition. I’ll use the basic 5 – min O.R. then the 30 minute OR to decide market direction.
Longs: With the exception of the TLT’s all the long picks are based on the premise that they are holding up better than the overall market at an area on the daily chart that is good support. If the market has confirmed an OR breakdown I would rather wait on establishing long positions than take the risk. If the market is choppy or moving up these are stocks to consider.
Pivots are positively stacked:
TLT
UA
DLTR
Pivots are negatively stacked:
AAPL
TSLA
JAZZ
MCD
PNRA
ALXN
DECK
Shorts: The market is in oversold territory so shorting weakness is a risky. The catalyst for a further move lower in most of the shorts here is that they are at key daily levels, or broke them on Wednesday so weakness could attract new sellers.
SYK
MON
MOS
WYNN
X
CF
LVS
