Back-to-back Accumulation Days has the Big Wave Trading model switch back to BUY mode. The NASDAQ still remains below the 50 day moving average, but the S&P 500 continues to act strong on the back of bank earnings. Technology earnings are now in focus and during the after-hours session INTC and IBM reported earnings disappointing the street. Both stocks will be putting pressure on the market during tomorrow’s action and it will be important to see how both stocks respond tomorrow. Given the past few days price action is strong and what we needed to see this market to move back higher.
Tomorrow can bring on a different market and it is why we have a stop loss strategy. We cannot blindly go long or short without knowing our exits. Risk control is a must as tomorrow may bring on intense selling, but there is no way for anyone to know what tomorrow will bring. Of course there are many opinions, but are these opinions always right? What happens when your opinions are wrong? A disciplined mechanical approach to the market is far better than forming an opinion and trading by the seat of your pants.
Earnings season continues to benefit banks and with support from the Federal Reserve it shouldn’t surprise those many banks are reporting good earnings. INTC and IBM were hit hard today along with APOL and ISRG. INTC had previously warned and it couldn’t impress the street with the previous warning. As we move forward with earnings expect a bit more volatility as companies report. Be aware of when your stocks are set to report. Know where your exits are and make sure you are using proper position sizing.
Cut your losses short and we’ll see if this market can build upon Monday and Tuesday’s action.