A roller coaster of a day for stocks as fears over trade gripped the market towards the latter half of the day. Topping off the selling was the reaction to Trumps Lawyers office raid. Volume was well off from Friday’s level; indication traders weren’t as active in the market during Monday’s trade. For the first half of the session it appeared as if we would potentially see the market finally confirm this new market rally. Sellers had other plans, but without volume coming in higher on the session Monday was not destined to be a follow-through day. We remain vigilant in this type of environment. Even if we do see a follow-through day on Tuesday we’ll need to get through this week without any distribution. Given earnings releases are near anything is possible. Stay nimble.
It won’t be long before FB sees its 50-day moving average cross under its 200-day moving average. Better known as the death cross it typically indicates the stock has undergone a rough time. The last time we saw FB’s 50-day under its 200-day was the beginning of 2017. It proved to be a great buying opportunity, but is this time different? The market environment is certainly different from early 2017. AMZN and AAPL both remain below their 50-day moving averages. This is a sign investors are moving away from Big Cap tech. Our FANG stocks are struggling and given all the attention these stocks received last year must be a shock to those who do not follow sound trading principles.
The good news for stock market bulls is we continue to see new long signals. If we were in real trouble this market would be unable to produce any long signals. Perfect setups continue to elude us, but given we have not had a proper correction since 2011 it really comes as to no surprise. The lows in February 2016 were considered a small correction and it did produce some nice gains. However, it failed to clear the decks and produce patterns we have seen in the past producing a lot of triple digit gains. In the end, we can only trade what is in front of us rather than what we want. In order to succeed in the market you must take what you can get. Do not try and play the hero in this market. You will only lead to heartache and a diminished portfolio.
Stick with Big Wave Trading. We continue to succeed as do our subscribers. Good luck to your trading this week!
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