Welcome to the first ever Mid Week Update, if you saw the latest Week Ahead post you would know that I am no longer doing the Daily Analysis (at least until September). Now, I am doing the Week Ahead post and the Mid Week Update. Let’s get into it.
$SPY has had a rough couple days so far this week and with two remaining we could really see the the true character of the market and the next intermediate direction it is likely to head to. We are now forming a more macro wedge pattern between the uptrend line line from the November lows and then Downtrend formed after the May 22nd highs. This resolution of this wedge pattern will likely bring the next intermediate direction in the markets. We will all be ready for a short or a long depending which way it triggers.
Specifically for Thursday (6/13/14) however the plan of mine is buy a gap down to 160 for a bounce and short a gap up into 163. If one of these two things does not happen – I will more than likely do nothing tomorrow.
Apple ($AAPL) – has been forming a large wedge pattern and it finally broke lower today as well as breaking a bear flag lower as well. It also showed relative weakness today. These are all key signs we are likely to see some follow through to the downside in this name. Macro downtrend as well.
Walmart ($WMT) is a prime candidate to short a gap up into resistance – chart is below.
CitiGroup ($C) another nice chart that looks to be shortable on a bounce back into the broken neckline (broken today, see chart below).
Amazon ($AMZN), Hewlett Packard ($HPQ) and SanDisk (SNDK) all had failed breakouts this week which is an unfortunate cause of a bearish and/or choppy tape. Take trades and book breakout trades more quickly because of this.
Tesla ($TSLA) showed some strength on Wednesday which is a good sign. It also has a large wedge pattern forming and over the 100ish are it gets in motion to the upside. This is a prime candidate to buy on a gap down, if it shows strength. See chart below.
Gold ($GLD) is now trying to form a higher low and a large wedge pattern as well. Something to monitor as it gets closer to the apex for a breakout trade.
Oil ($USO) is something alot of people are watching right now as it has a macro wedge pattern forming and is close to breaking out of. Keep an eye on this one as it could potentially offer a good trending trade once it gets started.
Homebuilders ($XHB) is a concern as they are currently sitting on a long term uptrend line and look ‘heavy’. Lennar ($LEN) was upgraded on Wednesday and it still failed to rally. A big sign and not a bullish one. I would stay away from this group right now.
Here are two Tweets I sent out on Wednesday evening that I think are relevant –
“I really don’t understand economic policy that well, and I’m glad I don’t too. No reason to be that guy trying to connect the market w/Economics”
“The markets can be correlated to economics and policies but at the end of the day that really doesn’t matter compared to trends/price.”
Think about those two Tweets and if you disagree, think some more and then contact me and we can maybe debate sometime for some fun.
Overall, there are really not that many A set ups, let alone A+ set ups. This is because most stocks are extended to the downside right now and do not offer good risk to reward patterns to buy or short at this point. However, a gap up to fade or a gap down to buy would create some nice set ups.
Finally, some charts –