As the summer is drawing to an end I figured it was a good idea to do a post explaining some thoughts as well as share some charts. For me, summer ends Monday. I go back to school and back to regular life. This also means I go back to raising my time horizon for trades, likely not near as many day trades, more longer term swings. This is because I will be in class for most of the time the market is opened. Anyways, let’s get back to some stocks.
This past couple weeks have been filled with chop and corrections and therefore, I have not been extremely active in my trading. Right now, the market is what I deem to be in no man’s land. The bulls showed up late last week for a bounce after a fast correction, but bulls have yet to show commitment to this move (they could this upcoming week if they hold $SPY over 165.60). The bear argument is that we are now below a declining 21 EMA and holding below it comfortably. Also, there is a solid wall of resistance that $SPY is coming back into which stands around 167.50-168.25 which the bulls will need to reclaim with power to negate.
The banks the past couple weeks have been disappointing. As a trader, I like to see the market being lead by the banks, not being drawn down by them. In particular, Goldman Sachs has been beaten and bruised these past couple of weeks, however, in contrast, Bank of America has been showing more relative strength than the rest. Bank of America is a prime swing candidate if it can hold above 14.40 for another day or so as $SPY tries to get it’s footing back.
Going forward, in my OPINION and what I am game planning for is a hold above 165.50 for a day or so which would get me back into a swing approach and then to see new new all time highs in September to early October. Whether or not this happens, I do not know but as of right now that is my thesis for the market. Price will need to confirm this thesis and if it does not, I will not be trading it for such.
To determine which stocks to buy and which stocks to skip if we do find ourselves back in a swing approach I am going to be using my favorite technique – ask yourself which stocks are showing relative strength (stronger than $SPY) and then buy those when they have tight consolidation patterns.
Have a good week, be sure to follow me on StockTwits and Twitter for my latest charts and thoughts (@BENCBANKS).
Here are some charts I annotated with some thoughts on them –