MarketSurge powers the charts in this video.
Last week started with a big downside gap. Buyers stepped up immediately and the gap was erased by the end of the week. Many stocks, especially from the tech sector, remain in a pattern of lower highs. This is why I view this bounce as a short-term trading opportunity. The beauty of corrective markets is that they are very volatile and provide ample intraday and swing trade setups. For example, the semiconductors ETF, SOXL was up 36% from its opening print last Monday to its weekly highs.
What are the chances for a bounce follow-through next week? Given the price action on Friday – a tight-range inside day for the indexes and many major stocks, we might see a continued push toward their declining 20-day moving averages or the VWAP since their July highs.
The tape remains better suited for nimble trading and quick profit-taking. The silver lining is that last week we saw plenty of stocks reacting favorably to their earnings reports and holding well. This is the foundation for great future setups.
If the correction resumes at some point next week, the first sign would be a move below the previous day’s lows.
I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.
Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.
Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.
Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.
