It appeared as if we have begun summer trading with light volume and boring trading session. There were pockets of excitement, but overall it was relatively quiet trading session. Energy was a big draw on the market overall with Utilities sluggish as well. Crude oil was down slightly, but sellers took to energy hard as the S&P 500 Energy Sector was down more than 2% on the session. Bigger news on the session may be the bond sell off and renewed fears over a Federal Reserve rate hike. This market continues to be within a specific range with the inability to move with force in either direction. Until, we see a meaningful move in a direction this market will continue to trade sideways.
We have been harping on the XLU and TLT trade for some time now and what it means for rate hikes. The Big Wave Trading chat room agrees the Federal Reserve is not about to raise rates anytime soon. Could the market force its hand? Anything is possible, but the sell-off in bonds and in utilities certainly gives the feeling traders have a belief in a rate hike. Price trend has already indicated TLT is in a downtrend with XLU teetering on the edge. Whether or not a rate hike is in our future the trend for these ETFs are certainly telling a story.
Another clue on rates certainly lies with the High Yield market. HYG and JNK are two ETFs tracking High Yield market and do a pretty good job. Both ETFs ended the day lower on above average volume. While both have recovered off the 2014 lows they are now struggling to maintain their current levels. If rates do rise it would put tremendous amount of pressure on these two ETFs.
Something to keep in mind is Friday’s monthly option expiry. These weeks can lead to volatile sessions and is a reminder why a robust risk management strategy is a must. There are popular strategies for managing risk, but without one you will sink yourself into DEEP holes. Cut your losses short and execute proper position sizes is a great way to start.
There were a couple of intraday stocks with big moves today like PTBI and VGGL. Big intraday moves done with a precise plan can help boost returns. However, without a clear and concise strategy you will blow yourself up. In addition, you must make sure you adhere to SEC guidelines on day trading. Outside of these two we had our eyes on two other names. One is BLDR in a 3 weeks tight pattern. A breakout above last week’s high is something we are looking to get long. Our platinum subscribers get a list of intraday stock plays every morning prior to the market open. Want to join click here and register.
Until we begin to see a move with power in any direction we will continue to stay within a neutral stance. At the end of last week we were close to seeing a breakout, but buyers failed to deliver a meaningful breakout. We will continue to execute our trade signals and wait patiently for our opportunity to strike. Keep cutting those losses short!
