Sunday, September 11, 2016

Bears Clawed the Bulls


In my post last Monday, I had a bullish bias but I also alerted my readers to the possibility of a   Counter Trend   in a heathy bullish market.  Senior fund managers came back from their 3 day Labour Day weekend and began to realign their portfolios.  They harvested their profits from the three sectors  -  $XLP (Consumer Staples),  $XLP (Consumer Discretionary) and  $XLU (Utilities)   They invested their profits in the  $XLE (Energy) and  $XLF (Financial) sectors.   Every sector had a major distribution day on Friday.   $SPY  and  $DJX  sliced through below the 50 dma (day moving average)   $QQQ  fared a little better and just kissed the 50 dma  because the institutions supported some of the tech sector names.   $QQQ  had been the leading index since the low of June 27th and had surged  +15% by August 5th  as compared to  $SPY  which had surged just +9%  in the same time period.


My Market Outlook


Friday Sept 9th, We had a major  distribution day  and lot of traders suffered major losses in their positions.   I heard from a lot of my readers who were shocked and didn't quite know what to do with their positions.  My students that I mentor, were already out of their losing positions because they had planned their trades precisely to cut their losses short.   They were prepared for an eventuality such as the one we faced on Friday.   How did they know that we would have a major distribution day on Friday?  We did not know that this would happen on Friday but we were all fully aware of the fact that September is one of our worst months in the market.  Any trades that we executed were done with a very small position.  

What is in store for us Monday morning?   I did some analyses of the  $SPY  index.  On August 21st,  2015  (Friday)  and June 24, 2016  (Friday), market was clawed by the bears and the following Monday, market got clobbered again in high volume.   $SPY  sliced through the  200 dma  in heavy volume.   Could the same thing happen again on Monday?   I don't have an answer to that but one should be prepared for such an eventuality and trade accordingly.  It would be unwise to take on a bullish position knowing what happened previously after the market corrected on Friday and what followed on Monday.   Just recently after the market corrected for 4 days from June 24th through June 27th, we had a rally for 3 days.   We had a follow thru day on July 1st and every one was in holiday spirits for July 4th.   This was the time to be in the market just when everyone had given up.   $SPY  rallied +9%  within 4 weeks while  $QQQ  rallied close to +15%


Stocks on My Watch List


Lot of stocks got clobbered this week but quite a few managed to stay above the  20 dma  while the major indexes had sliced through the  50 dma  These are the stocks that institutions are supporting.   Once the market resumes its uptrend,  these are some of the stocks that I shall be monitoring.

  1. $EBAY
  2. $IP
  3. $PE
  4. $CLR
  5. $PBR
  6. $FB
  7. $ATVI
  8. $BABA
  9. $ACIA
  10. $AMAT

Mentoring Service

I have had a very special request from my followers on Tweeter and Linkdin regarding a webinar for 60 - 90 minute session.  They have been asking me to give a session on:

How I Scan for Growth Stocks How I create a Trade Plan

If you are interested in attending this webinar, please contact us at:

investorspotlight@gmail.com 

We will have a limited size class for this webinar.


Happy Trading!

Amin



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