Market Orientation & Bias:
1. Recap of Last Week
Last Week’s Post: CLICK HERE
A. General Recap
This week was yet another week of the grind higher but in the midst of it, it felt like it could be the start of a new pullback. We came in on Monday with a huge gap lower as a result of the Russian incident, this put a lot of traders on watch for a new correction. Also the combination of the news and futures action on Sunday night likely convinced many market participants that being bearish was the ‘right’ way to position based on the news (not something I support at Ben C Banks Trading). However, as we all know in hindsight (20/20), this was far from the case. After closing well off the lows on Monday, another huge gap occurred overnight on Tuesday, but this time higher. The shorts were wrong and had a choice: cover for the loss, or TRY to remain solvent as we potentially and likely would continue to grind higher into oblivion. The second was the path in which the market took for the rest of the week, grinding higher, hardly slowing down.
The market is out there to frustrate MOST of the people MOST of the time, this week likely did a very good job at doing this, with the combination of Russia and ‘the grind’.
B. Past Set Up Recap
MPW – Broke out nicely early in the week then quickly failed, a no trade at this point. Leave it alone.
PBI – A very strong breakout this week and nice strength throughout the week. Looks good and higher.
SEM – Amazing looking breakout in this name, looks strong and higher. Hard to enter now after the breakout though.
2. Strategy For Next Week
A. General Broad Market Thoughts
As we stated last week:
The market continued higher without a lot of consolidation, appears like the infinite grind higher is going to continue. There is nothing inherently bearish about the $SPY chart, at all, but it would be nice to see a test of the 21 day soon. The lack of STRONG set ups did not have a strong impact on the market this week, though we still do not have a huge number of high quality set ups now either.
This is still true for this upcoming week. There is without a doubt still a lack of HIGH quality set ups and a pullback would change this, but we of course do not always get what we want. Heading into next week, I think a lot remains the same. We will take all the set ups that come our way, but with a ‘grain of salt’ as many of the names are extended, and the quality is lacking.
Shorting remains a tricky business to be in as the grind higher seems to never stop. It likely will remain difficult to short the indices, if you want to short I would look towards weaker sectors such as the biotechs or transports. Pick your spots, take your trades.
B. Video Analysis & Watchlist
C. Set Ups & Charts Watchlist (click to enlarge charts)
AA – A very nice looking base in this name. Ripe for a breakout over 12.25ish. the strength on Friday was encouraging, long base and defined risk (11.60 stop).
FCS – This is a weekly chart. It is poised to breakout over 14.50 and if you happen to be a position trader then this name likely is one for you to look at with a stop under 12.00. Timeframe: Multiple months.
RMBS – Finally, RMBS has one of the better looking technical set ups I have seen in a while. The daily and weekly chart look poised for a new breakout and run higher. A great swing set up here as the base is a very large.
3. Current Positions
CLNT – Still holding on to this one as the base continues to build. Stop is underneath 5.80ish.
AA – A very nice set up here, after failing to breakout on Thursday, it came roaring back on Friday showing great relative strength. Looks poised to run.
RMBS – Solid looking pattern here on the weekly and daily timeframe. Long versus 9.20ish.
4. General Tips & Reminders
Be consistent in your process, disciplined in your trades & flexible in your mind (perception is reality).
Have a great rest of the weekend. Email or Tweet me with any questions or comments.
The purpose of the Week Ahead post is to prepare you for the upcoming week in the markets. I do this not only to help others learn and develop trading skills but also to develop and cultivate my personal thoughts for the Week Ahead. Below you will find a written commentary portion followed by a Video Analysis the stock market and the set ups I am watching this upcoming week. This post is organized into sections, see bold titles and skip the items in which you are not interested in! Enjoy!
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