Markets are pulling back pretty good this morning calling all traders to be very light in the portfolio and will probably get even lighter today. I think the market has been pricing in a trade deal, a successful trade deal, over the past month. That seems, possibly, to be unraveling a bit.
Yesterday we mentioned that none of the indexes were closing below their 21ema’s. Today, all 4 indexes, the IWM, SPY, DIA and QQQ are presently below that level. This now changes my tone from buy the dip to sell the rip – ie, the character of the market is changing here. Now, we could get a puke this morning and close back above the 21ema’s – if so, fine. But I think the biggest thing here is to just keep in mind one thing: Trade What the Market Gives You.
For me, that means not over extending myself with swing trades. Swing trading in news driven markets is really tough. I’m going to start trying to sell more premium – spreads – as well as focus a lot on the smaller time frame trades.
On watch for today are some of the beaten up names from yesterday, SHOP, TTD, ROKU, as well as some shorts like W. I don’t really want to start shorting this morning, I just don’t like shorting a gap down or buying a gap up, but I’ll be looking for opportunities in both directions. I’ll likely have to cut COST today despite really liking that chart. Outside of that I’ll just be doing more short term trading as the market seems to have found some volatility here. Keep an eye on my screen if you are around.
Again, we all have talked about ‘needing’ a pullback. This pullback will probably be a great buying opportunity at some point. But we may have a week or two of jerky action with a downward tilt. We’ll get through it.