Since the US government shut down the market is up 12%, but Wednesday’s action saw each major average face resistance. All morning long it appeared as if the market was going to continue its march off the lows, but sellers had a different plan. SPY hit resistance right at its 50-day moving average closing in the lower half of its range. The same occurred to QQQ and IWM. Both QQQ and IWM are above their respective 50-day moving averages. Given the price action for the day it would not be a surprise to see both ETFs to fall back below their respective moving averages. We have come a long way from the December lows, and we must remain vigilant with our trading execution. Risk management will always be our top priority and we strongly suggest it is yours as well. We will execute our plan and follow the market’s price action.
It is Thursday and that means it is AAII Sentiment Survey day. A big jump in Bears this week moving up nearly 7 percentage points to 36.3%. Bulls drop nearly 5 points to 33.5%. Not a huge surprise all around given we have another v-shaped rebound. While these v-shaped rebounds are normal now for this market it would be great to get a consolidation period. We would get some solid base setups, but with this market it is unlikely we would get an ideal setup. Therefore, we must adapt to what the market is giving us. There is no sense in trying to force trades. It will only lead to heartache.
We are going to undergo a site redesign this weekend and we cannot be more excited to give a more up-to-date look and feel to Big Wave Trading. Please remain patient will the upgrade is underway. All new positions will be posted prior to the release of the new site.
We wish you the best in your trading this week!
