Monday’s session was witness to another day and another round of selling as the NASDAQ closes below its 50-day moving average. Volume was lower across the board indicating institutions weren’t selling in droves, but price action is not ideal. Closing below a key moving average is a warning sign. Information technology and Industrials led the S&P 500 lower. Telecom, Energy, and Healthcare were higher on the session with Financials finishing the day flat. We simply are not heading into a positive seasonal period for the stock market and this weakness does not come as a surprise. Our members have benefited from our ability to cut losses and be positioned for what we are seeing right now with the stock market. Regardless of what is going on outside the market we must be focused on price action of our stocks and the overall market.
Closing out the month of July will be interesting today. Despite volume being lower market participants did not want to support technology stocks. The QQQs broke below its megaphone pattern suggesting we have a bit more downside left. IWM and QQQ have June’s low as support and will be interest to watch that level. It would not surprise us to see further downside from this market one bit. Does it mean we are going into a full-fledged bear market? It is anyone’s guess. Remember, the last time the market fell nearly 20% was in 2011. I know some believe 2015 into 2016 was a market correction, but it wasn’t deep enough in our opinion. However, it was good enough to at least give us some positive momentum for a big rally. Anything is possible here and we are going to take advantage of whatever this stock market wants to throw at us.
Our chat room is going to have some SPY levels again as we did yesterday. Only platinum members are able to see these trades. Most others should really just manage current positions and wait for this market to turn positive for longs. Unfortunately, we just do not have the tailwinds needed to see gains on the long side of the market. This may change as we move forward, but all we have in front of us is a market teetering on the verge. Could it fall, yes it can! Be ready and it is okay to step aside and wait for the market to come around.
We hope you have a great day and week of trading!
