Hope everyone had a relaxing weekend (and to those students whom follow me: Had a successful exam week and are now enjoying your time off). Anyways, you came here for stocks, so let’s talk about them some now.

This morning the markets have already done what markets (always) do; confuse people and make them incorrect. Specifically, I mean that the futures were higher, even oil was higher (long time since that has happened). But, shortly after the markets opened, equities and oil both sold off and now oil is read and equities are on the lows of the day.

Now, I cannot say where the markets are going to close come this afternoon, but I can offer you this interpretation of the action that has already occurred:

So far, this action we have seen today and part of last week is not healthy. The action has been choppy and lacked momentum. But even more importantly, there have been no set-ups, if there had been any set-ups, perhaps the bulls would put up more of a fight, but ever since week the before last, there have been zero set-ups. This is of course is unfortunate as we do not get paid unless we trade, but in the long run, being patient and waiting for your set-ups is much more important than rushing a trade right now.

So, given the weakness today (and last week), I would not be surprised to see some short set-ups develop later today or this week. Again, a quick summary of what we look for in short set-ups:

  • Price Contraction
  • Closing on the Lows
  • Near Resistance (21 ema)
  • Relative Weakness

If these four things are true, it is 100% an awesome short set-up.

So, later this afternoon I will be scanning through some charts looking for such set-up. Til then, have an awesome day and let me know if you have any questions.

Miscellaneous Thoughts About Shorting