All charts in this post are powered by MarketSmith
Big surprises often lead to big moves. This is why one of my favorite screens to run on MarketSmith is for stocks that beat earnings estimates by more than 50% and receive favorable market reaction. Here’s my version of it:
The current list is quite short and involves stocks that have weathered the market correction quite well: SEND,
Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.
All charts on Momentum Monday are powered by MarketSmith
When SPY broke below its 260-280 box two weeks ago, it entered into a downward spiral and quickly dropped to the low 230s. Few were prepared for a 10% fall in seven trading days. The oversold bounce came a bit later than expected by most but it was a powerful one. Those who bought the extreme weakness too early, are very motivated to sell when their break-even levels are reached. This is why bear markets characterize with monster rallies followed by powerful reversals.
What’s next?
SPY has most likely entered into another box and we will see range-bound trading in the next few weeks. That range could be 240 to 260, or 230 to 250. The smartest way to approach the new box is to play the ranges and stay away from breakouts and breakdowns because most of them are likely to fail on longer time frames.
In the last Momentum Monday for 2018, we covered enterprise software stocks like OKTA, TEAM, and WDAY; the coming competition between DIS and NFLX; the price action in SPY, AAPL, and others.
Happy New Year!
Check out my latest book: Swing Trading with Options – How to trade big trends for big profits.
All charts in this post are powered by MarketSmith
The big 5% Wednesday was followed by a strong intra-day pullback but a strong close. In the end, all major market averages finished near the highs of their daily range.
Overall, today was a big win for the bulls. There are more stocks setting up and looking constructively. With all positives in mind, it makes sense to continue to be cautious and to operate with the thesis that this is just a rally within an ongoing bear market, which means stay nimble and don’t hesitate to take partial profits on strength, often. From a technical perspective, SPY has room to run to 260 before it encounters a serious resistance.
Check out my latest book: Swing Trading with Options – How to trade big trends for big returns.