A Small Recovery Stalled at resistance
Premarket trading for yesterdays market was posting an implied dow open of -800 points! Thankfully at market open things remained orderly, buyers stepped in to save the market and selling pressure subsided as value buyers showed conviction.
Futures trading has stalled at the mentioned 2700 level that was previous support. Premarket trading is low volume and showing very choppy. Today's trading will be key to break above and hold this market level.
Due to the violence of the recent sell off most charts are not sound for technical trading. Many large-cap stocks have pulled back to their 50 day moving averages. This is an opportunity for Value buyers to step in and acquire shares at a lower price.
I do not believe in a market crash, while there is weakness and we may have seen the end of the slow and steady grind higher daily. I still believe we are in a bull market.
Some key things to keep an eye on in the coming days and weeks. Interest rates or news from the fed, higher interest rates are typically bad for the market. Bond yields are a big deal here, if bonds become more attractive as rates move higher we can start to see the beginning of the end. Many are looking for an "inverted yield curve" this has preceded nearly every bear market, technically we are anywhere from 12 to 24 months before this yield curve.
Continue to remain bullish for now but watch 2700 closely. We may have trouble with this price level.
I will refrain from tracking individual stocks this week. There is too much noise in recent price action.
If you have a stock you love in the long term, we may be seeing a good buying opportunity. I personally received 4 phone calls from financial "professionals/advisors" yesterday begging me to buy. These conversations all went back to ETF's they are hot right now. A pullback like this offers a broad buying opportunity and sector ETF's are a great way to buy and hold larger portions of the market such as health care, energy, financial, retail or other sectors. Most brokers have a list of ETF's you can trade on their platform. some even commission free.
I will begin to track individual positions again as volatility lowers and price action settles in. I anticipate the price to settle by the end of the trading week. This weekend will be a large blog full of value and ideas to take advantage of this recent market event.
Continue to protect your capital.
Trade safe, remain hungry and humble.