Early morning futures are indicating stocks will open in the red to begin the final month of the second quarter. We have had quite the little correction since peaking back in early May. SPY is sitting just on top of its 200-day moving average along with the QQQ. IWM has blown through the key moving average. Our trade wars have certainly put a lot of pressure on the stock market. Bonds have been doing quite well as seen with AGG and TLT. This indicates a flight to safety and traders have been moving back into bonds. Is this situation signaling a recession? Perhaps it is and remember we have yet to see a proper recession since 2008. This current economic expansion is long in the tooth by any historical measure. It may be all gloom and doom the market is oversold. A bounce may happen any time and we’ll be ready for it regardless if it will last. All we can do now is follow our process and execute with flawless precision.
A look at stocks who had a good month and week despite us selling off is a decent way to search for potential buy candidates. FINVIZ offers a decent free stock screener, but it is a great way to look for potential stocks. MDXG was a top performing stock from last week. The screen used was to show top performers from the week and month along with a positive P/E (the company makes money). TSS and SEAS were others on the list. While these may not be perfect the screen does allow you to build a watch list of stocks who were able to shun the stock market’s selling. Get your week started off right with a proper game plan. Knowing buy points, exits, and position sizing will go a long way to helping you succeed in the stock market.
A positive with all this selling has been the decline in Crude Oil prices. Crude while higher this morning has come well off its highs in the mid-60s. Currently, the commodity is in the mid-50s. For those heading on the road during the busy summer season will enjoy lower gas prices given the drop in crude oil.
Despite the selling last week, the volatility index along with its tracking ETFs did not eclipse early May highs. We are not going to try and explain the why behind it but keep an eye on the market overall. Did sellers finally exhaust themselves? The way most market pundits are talking you would think they are just getting started. For us, we are in a cautious mode. We do not feel a need to take a stand as to where the stock market is heading next. Price is our ultimate indicator and will follow as it moves.
We hope you had a great weekend and wish you the best of luck with your trading this week!
