($SPY $SPX) Today something did change. For the past couple weeks I have been saying ride the trend until it stops. Today we sold off on higher volume, and broke the 8 EMA and the uptrend line. While tops rarely happen in a day, today was a day to notice and possibly switch some gears and raise some cash. I am not against shorting, all I want to see is a trend develop that I can follow. Choppy markets are annoying and very difficult to trade. Regardless of what I want, what could happen now is a couple things:
1. Feeble bounce tomorrow or around the 21 EMA and then a continued pullback.
2. A choppy market then a pullback (similar to what we saw in September)
3. This was all a hoax, and we trade higher and regain the trendline tomorrow (unlikely)
Personally I think the first scenario is most likely. I will post a few charts below this post (click to enlarge) and the intraday charts of $SPY that I did today will be the pattern that I will be watching to see if it set ups on the daily chart. If it does, I will short the market. If these type of patterns do not show themselves I will sit on my hands and be patient. It is hard to fight the market so if the market does decide to pull in, breakouts will likely fail and strong momentum names will lose the momentum. We shall all see how this pans out but in summary, I would say use extra caution as there are a decent amount of warnings signs out there but also be prudent when it comes to shorting.
Apple sold off more today and failed to hold the micro uptrend line. Nothing has changed. Maybe eventually we see something different and we break the down trend line but not now.
Google sold off today with the market. This stock has been a leader and is not one that you should be looking to short, there are much weaker sectors/stock to short.
Amazon had a momentum trade breakout failure today. Another stock I would not short – yet. It is holding too strongly above the moving averages.
Homebuilders which have been a leader in this market all took a huge hairbut today. They should definitely be on the short candidate list. A bounce back into the MAs should be shortable. Choose the weakest in the group however (Ex. $LEN)
Gold and Silver continue their plunge after breaking their wedge down. Hard to guess bottoms but I do think there is a bounce coming soon. Not playing it though — not a bottom guesser.