Hi there,
I’m liking this market behaviour a lot!
Yes, I know it’s chaotic, but we’d been warning about unsustainably overbought conditions since mid-June, and the good news is that stocks are correcting across the board.
Why is that good news?
Because – in time – things will settle around the areas of higher probability technical levels, giving us the prime opportunities that we like best.
The markets…
Again, just to remind ourselves… since mid-June we’d seen largely overbought conditions accompanied by sub-optimal setups, plenty of whipsaws, false breakouts, and a general lack of tidiness.
That set the scene.
Then we had the unforeseeable catalyst (Crowdstrike) that shook things up, though in reality the indices had already peaked by that time.
The outcome is perfect for us as our favourite setups can now reform from solid bases – both bullish and bearish.
And we’re all about solid bases – typically near Key Levels.
Plus, even during these turbulent conditions I still keep getting feedback of excellent trades from the many lions among us!
Market Outlook
Watch the video at the foot of this email for more detail.
Last week I said the SPY and QQQ were likely to stabilise temporarily before further rotation effects.
That temporary stasis lasted four days!
I also said earnings would continue to be a mixed bag, and I would not be taking pre-earnings trades this time around. If you did want to have a go at a pre-earnings setup, only do it on a conditional breakout basis – preferably while watching live. While quality has been in short supply over the past few weeks, we now see why, and this reset will ultimately produce more of the excellent setups that we prefer.
Be patient… this market volatility is not over yet. And being patient is where the big money is made… Watching the chaos while keeping your powder mainly dry. By now with me you’ve seen umpteen times how the best setups form around Key Levels with an abundance of Big Money Footprints present. Now’s the time to observe, knowing you’re in complete control and knowing you’ll pounce when the time is right.
Our market timing is proving to be outstanding yet again. Being good at market timing enables you to swim WITH the tide at the right time.
The Main Indices
Look what I said last week!
“I would be amazed if the IWM can keep this up for long.”
And it didn’t, did it!
As I’ve said many times, when the market is ready to decline, the IWM is typically the first and takes the biggest hit. In this case it’s taking the biggest hit – with more to come – but bizarrely wasn’t the first. This boded very badly for it, which is why I highlighted it last week.
Market Timers
- Longer Term Market Timer (OVIs): Green.
- Medium Term Swing Timer: You just have to love this indicator. Bearish last week and just a tiny bit oversold this week, but that can continue.
- Index OVIs: Extraordinarily robust with only the SPY turning red, and even that only for a day. That suggests a temporary snapback or pause.
Fast Filters Stock Selection
Quality has been even more patchy this week than the past six weeks or so. And now the markets are showing exactly why. So, this is a time to observe.
Remember, quality beats quantity. Even with our amazing new technology, a chart still needs to have the right qualities for you to consider trading it.
Pick your playbook and stick to the best quality setups that conform to it.
My playbook is OVI, near Key Levels, Shrinking Retracements, and a consolidation/sideways move. The other two Big Money Footprints are desirable but those four are essential to ME!
Watch the video for this week’s full analysis.
Video analysis
Remember, you can play the video at 1.25x or 1.5x speed if you want to save time! I have placed all the stocks covered in today’s review in your “Latest Preview” watch list.
