The last month in the 3rd quarter should be an interesting one given the geopolitics and seasonality trends. We continue to see market participants on edge worried about the next tweet the US President might send. Big Wave Trading subscribers have no such worry as we are well-prepared for whatever this market may through at us. The 50-day moving average will be a key area to watch for QQQ and SPY. So far, it has provided a ceiling for both ETFs. For now, both and including IWM remain in no mans land for the time being. A powerful move through the 50 day would certainly be a good sign for this market. On the other hand, more distribution would indicate lower lows are headed our way. Price will always be our number one and only guide.
There are opportunities out there for those who are willing to take it. We still see traders who are timid in this market. Timid and cautious are too different things. Not being able to act is not a good sign. As a trader you must be able to adhere to your system. If a signal triggers you must be able to take it. An exit signal presents itself you must get out. For those who ignore or even override their system are in a world of hurt. We see all too often where people are not confident enough or too emotional about their trading. Success comes to those who act and have a sound risk management strategy. Flying by the seat of your pants, in the long run always fails.
Futures this morning are pointing to a decent drop as tariffs take effect. The financial news media loves to give a reason for everything. We are seeing stocks drop after a long weekend and are still in the same range we have been stuck in. Volume will likely be high today and we’ll need to pay attention to how this market reacts to this open. Bulls will want to see this market rally from the opening. Bears will enjoy the open. We’ll be paying attention to our stocks and their price action. Another thing to keep an eye on will be the put/call ratio. The ratio hit 1.15 on Friday and has been somewhat elevated for the past week. Shall we see the put/call race higher on fears this market will head lower once again? Time will tell but keep an eye on it.
We hope you had a tremendous long holiday weekend. For those not in the tropics fall season is nearly here. Good luck with your trading this week!
