The first week of earnings provided another positive week marred by a slightly tougher Friday. This particularly hit oil and gas energy stocks and financials stocks, though all the indices held up pretty well.
The big tech stocks shook off the Nasdaq’s imminent rebalance where the top seven tech giants will have their collective weightings reduced on the index.
Our market timing has continued to be outstanding, purely by using our unique tools and approach. Recalling the past couple of weeks, it would have been easy to play on the fact that the markets were overbought and that a retracement was imminent, but our indicators and experience suggested there was more juice.
That juice is progressively likely to be on borrowed time now. The only question is when the time will come for a meaningfully steep retracement. The most likely scenario is for further increased volatility (we’ve already seen that over the last couple of weeks in both directions) during earnings, and then an increase in profit taking after the big tech stocks have reported.
As ever though, our most important job is to only trade what we see… and for us that means the Big Money Footprints in the context of our three Master Keys. Keep it simple, avoid having an opinion, think quality over quantity, and only trade the AAA setups.
The indices continue to show robustness and, while I would expect 20-dmas to be tested, the overall strength has a good chance of continuing until after the big techs report their earnings.
More day-to-day volatility is likely, and we continue to edge closer to much more meaningful retracement, but as with the past couple of weeks there is still some room for further upside first.
Watch the video at the foot of this email for more detail.
The Main Indices
The S&P is holding firm but is significantly overstretched, even from its 20-dma, so a minor pullback to at least that level is inevitable soon.
The QQQ is also overbought from its 20-dma, but the big tech stocks are still attracting buyers.
The IWM is likely to pull back to its 20-dma in the next few days.
The DIA looks strong when you look at 12-month chart. A test of the 20-dma is likely soon.
Last week I mentioned that the June highs were attainable, and they have indeed all been reached and breached.
- Longer Term Market Timer (OVIs): Now full green, but like the last three weeks only just by a whisker. As suggested over the last couple of weeks, this could easily slide back into half-green.
- Medium Term Swing Timer: Bullish and not overbought.
- Index OVIs: All currently in broadly positive territory but looking like they need a brief pullback.
Fast Filters Stock Selection
Great setups near Key Levels have been harder to come by this week as there are so many stocks that are extended.
I’ve continued to focus more towards the bullish side of things, but it’s likely to get more challenging to find ideal setups. As ever, I use the various Big Money Filter combinations, particularly the combination of bullish Shrinking Retracements near Key Levels with convincing OVIs.
Here is a smaller list of stocks that look interesting for our consideration. Remember to reference the video so you know what my sentiment is on each one:
ABT ADP AES AMT BABA BAX BBWI CHRW CMCSA CTLT DAL DOCS DOCU ELAN ES FIS FITB GEHC GFL GH HSY SBAC SRE STWD TRIP TRP ZI
We’ll give details soon for April’s OptionEasy Bootcamp in ORLANDO!
Next up is our Stocks Summit in London on 2nd December which will also be accompanied by huge new releases. We’ll also do a Foundation Day online the Saturday before the big event so we can focus on more practicals during the event.
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.