June 28, 2018
By Mish Schneider
If you are an active trader, (a one to two day in and out trader), and have had the savvy to pick your spots, lots of money out there for both the bulls and bears.
If you are a swing trader, the picture changes.
Like our bears in the photo, sellers have looked great for a few days.
However, whether you call it window dressing for the end of the 2nd quarter, or a temporary bottom, today and probably tomorrow, the bears turned to stone.
Which brings me back to swing trading.
What side are you on? What side should you be on?
Last night I wrote, “Seems different this time and certainly a time that needs proof before the bulls count their chickens before they hatch.”
I based that on a few factors. First, deterioration of phases. Secondly, a strong dollar and flight into bonds. Finally, rising oil prices while agriculturals and metals fall.
Today, the bounce brought back out the bulls. I’d say they have a short memory-but then again-they have been trained to buy the dips every time some green emerges.
If you are a trained bull, there are some positives.
Biotechnology opened lower and rallied back over the 50 DMA and back to an unconfirmed recovery phase.
The Russell 2000 and NASDAQ 100, both tested their 50 DMAs and bounced.
Country funds, beat up badly, saw some short covering and possibly, as in the case of China (FXI) a reversal pattern.
For the Bears, except for Biotech, no one of the other Modern Family members improved in phase.
Plus, the bounces in IWM SPY QQQ and SMH are not legitimate reversal patterns as none made new 90-day lows.
Transportation (IYT), in a Distribution phase, bounced along with the indices. Yet, it still closed red.
Semiconductors (SMH) also popped off the lows, but remain in a Distribution phase, or under the 200 DMA.
Ideally, you should be on both sides, with more weight to the long side until NASDAQ or Russell’s break the 50 DMA. Keep an eye on Transports and its 50-week MA as well.
Chickens will hatch under the right conditions.
However, bears are opportunistic predators. If they encounter something easy to kill, they will do so.
S&P 500 (SPY) Warning phase confirmed. 271.50 pivotal 50-DMA. If can clear and confirm a bull phase, will look to see if it can get to 274. If cannot, looking at 266.50 next.
Russell 2000 (IWM) 164.14 Monday’s low pivotal with 161.70 the 50 DMA support and overhead resistance at 166.50.
Dow (DIA) 243.08 the 200 DMA resistance. 239.25 the 50-week moving average support
Nasdaq (QQQ) 169.44 the 50 DMA. Big resistance at 174.25
Every day you'll be prepared to trade with: