Progress related to U.S.-China trade talks continues to lead stocks around like a dog on a leash.
Last week, the averages rallied for three days. This was viewed as the first rally in a new downtrend. Such a rally normally provides the best probability for a successful short-sale. This was targeted via a long inverse QQQ position which was relayed to premium subscribers Sunday evening.
After triggering a modest gain on Monday, this position was stopped out Tuesday after the president postponed the new round of tariffs until December. This tweet unleashed a torrent of buying, resulting in an O’Neil follow-through day (FTD) on Tuesday.
Some FTD’s occur amid few if any pattern setups among better-acting stocks, while others occur among some pattern setups. Tuesday’s follow-through came amid very few long setups. While an FTD is not to be viewed as a magic potion, it can nevertheless usually be a time to stick a toe in the water.
Accordingly, three long ideas were added to the Tuesday evening Focus List. One of them, Guardant Health (GH), triggered early Wednesday and was stopped out within minutes.
(Suggestion: On a day like Wednesday in which the Nasdaq future was trading substantially lower – down 1.9% a minute prior to the open – it is best to avoid any long entries that might trigger. Granted, some subscribers are unable to watch the market during the day.)
In sum, cash is king. We will be on the lookout for selected short positions in Watch List names for those who are so inclined. This includes using inverse ETFs where appropriate. In the meantime, as part of our general market analysis, it is instructive to watch the recent breakouts to see how widespread the failures are.
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Unless otherwise noted, charts created using TradeStation. ©TradeStation Technologies, 2001-2019. All rights reserved.
The views contained herein represent those of Marder Investment Advisors Corp. At the time of this writing, of the stocks mentioned in this report, Marder Investment Advisors Corp., Kevin Marder, or an affiliate thereof held no positions, though positions are subject to change at any time and without notice. Estimate data provided by Thomson Reuters. Expected earnings release dates provided by EarningsWhispers.