You always learn more on the first rally attempt after a Bad Break in the market. I have had this quote posted near my screen for years.
Similar quote from Livermore: “Never try to sell at the Top. It isn’t wise. Sell after a reaction if there is no rally.”
The market is simply not acting right since last Thursday. Here are the 5 clues I am listening to:
- Early morning strength quickly reverses trapping momentum/dip buyers
- 3rd consecutive close below the 20d, which I use to determine the short term trend, is now clearly down.
- 3 Bar Break Midpoint: Yesterdays’ gap up was met with resistance right at the midpoint. Today, we tried again and were swiftly turned away.
- Pilot Buy was another clue…..I tried a starter position in OKTA today on the open and it was up $5 in first 15 minutes plus SNDK was pushing up…all good until they ran out of bids by 10:30 and swiftly turn back. Closed OKTA for B/E.
- GLW another of my positions had “good news” yesterday on big deal with AMZN. Stock sold off, then it gets sold off again today. Clearly not acting right. Most fiber optic names are experiencing some distribution.
Now we have SPCX IPO Friday…..and they can’t seem to give it away. In past, Average Retail Investors were NEVER offered shares for an IPO pre-offering…..now we have Brokers (Fidelity) lowering the minimum account size from 500k to 2k to allow folks to buy. Indices lowering their standards to allow (force) passive ETFs etc. to buy the SPCX Offering. Not enough? SPCL (2x Bull SPCX) is also available for those wanting even more action.
More Livermore Wisdom: “If there was easy money lying around, no one would be forcing it into your pocket.”
It has become a “traders market”: fast moving, wider price spreads, higher volatility more suited to swing & day trading. As my friend JT stated today: You actually can do a lot of damage to yourself right now trying to push too hard if you are thinking in longer time durations.
It is a time for position traders to becomes more Defensive and know what you actually own, especially within those ETFs.