My timer turned green last Thursday when I added STM to my portfolio. I remained cautious at that time, however, because the market was bumping up against resistance that it had been struggling to get through with whipsaw, range-bound action.
Today SPY has broken out of that resistance, confirming the bullish ascending triangle that I have been pointing out for some weeks. While I expect a pullback is in order after reaching a new all time high, I now have confidence that markets can continue to rally in the near future. As such, I have added four new positions to my portfolio. Here is the SPY chart.
I have had several conversations recently with swing traders, who use technical analysis, about the difficulty in trading this year. Most of us are at or near break even, that is assuming we have good risk mitigation. Those who do not, the cowboys, are not fairing as well. The following two charts give some insight into why this is so. The first chart shows the SPY this year to date with the price plotted with a line and the 50 day simple moving average plotted in light purple. The second chart covers summer and fall of 2014.
Note how the price has whipsawed up and down through the 50 sma every few days this year. SPY has struggled to hold even a 50 day trend. During April, price went through the 50 sma seven times! When you look at the chart for last year, you can see that price stayed above or below the 50 day moving average for several weeks at a time. The lack of trend in 2015 is chopping trend traders to pieces and support and resistance traders are chasing an ever consolidating lack of support and resistance. As a result, individual stocks are struggling to follow through on their technical patterns. I remind myself that this is temporary and we will revert to the norm at some point. I would welcome a good sell off so that we can get back to a trending market, but for now, I will stay mostly on the sidelines. Here are the charts.
Thank you to Ryan Mallory of Shareplanner.com for joining me today on this comprehensive discussion of current market conditions.
The chop continues and the market is still giving mixed messages day after day. This whipsaw action is testing all my indicators and is getting old. We still have an ascending triangle in SPY but as we continue to test the bottom side more than the top side, my confidence in it is waning. The topside has a mattress of resistance to get through.
Meanwhile, cyber security stocks are taking a beating on the heels of poor numbers from QLYS. As such, CYBR is on my chopping block for a loss. Other stocks in my port are sitting on support and I will likely give them another day despite their relative positions to the 8 ema. These support levels have been more significant than the 8 ema of late. Here is the SPY chart.
Action in today's SPY tells us that the recent drop to support was a healthy pull back in an otherwise continued trajectory to the upside. The pattern has created a bullish Ascending Triangle with an ascending trend-line below and a flat-line on top. I will be watching for a break of that top line to new highs. Meanwhile I have added three positions today that are showing good potential, LRCX, CYBR and FLO. Here is the SPY chart.
Markets are pulling back after making new highs, which is not surprising and likely healthy overall. SPY is finding support at the recent breakout level as previous resistance becomes support.
But a note must be made of the sell off in bio-techs. They have been quite the bubble over the past couple of years. Drug stocks tend to be volatile so it is difficult to say if this is just a quick correction or the beginning of a turn to the downside.
This has brought some volatility into the mix so I will peel another portion of my XIV trade today, to lock in more profits there.
I will also sell the majority of my AAPL going into tonight's earnings but I will keep a small piece as the start of a core long term position.
I will keep my other positions as they are for now. Here is the SPY chart.
As a quick reminder, I will be leaving town tomorrow and will not be putting on a BTFD.tv show on Thursday but will be back next week ready to chat charts.
Indices are continuing to move in a range with choppy sideways action that neither makes new lows or new highs. This is providing a stock picker's market as some strong moves can be had while others fizzle out. Most in my port are holding up well but two tickers need to shore up or get kicked to the curb. TWTR is losing some ground and needs to recapture the breakout level/8 ema to remain bullish and CELG is looking like it is being rejected by multiple bunched MAs.
SPY is getting its getting its groove on today after testing the multitude of moving averages just below including the 8 ema and the 50 sma. But I note that it is still in a clear range that looks like a bullish descending wedge. This lack of drama is continuing to let the bottom fall out of volatility which is helping my XIV position. Here is that SPY chart.