Above the 40 (March 11, 2019) – Bears Put On Notice As Stock Market Finds Fresh Support
March 11, 2019 by Dr. Duru
AT40 = 63.0% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 41.8% of stocks are trading above their respective 200DMAs
VIX = 14.3 (10.7% drop)
Short-term Trading Call: bearish
Stock Market Commentary
The stock market’s scramble for support worked bigtime today.
In my last Above the 40 post, I described the dilemma facing my flip from cautiously bearish to bearish for my short-term trading call. The stock market wasted no time in forcing me to stay my hand right in the middle of the rule I established to guide bearish trades: wait for a breakdown or a test of key resistance. Bears like me were clearly put on notice with today’s trading action. It looks like my next bearish trade will be at a test of resistance. If THAT resistance gives way, then I will be forced to flip neutral and watch the stock market go right back into an extended overbought trading spree.
The S&P 500 (SPY) soared 1.5% as it leaped over its 200-day moving average (DMA) in picture-perfect form.
{The S&P 500 (SPY) gained 1.5% as it reached for its last high which is now the next resistance level.}
The NASDAQ (NDX) did the S&P 500 one better by gapping up and through its 200DMA and closing with a 2.0% gain. The tech-laden index tapped the lower bound of its upper Bollinger Band (BB).
{The NASDAQ (NDX) gapped up strongly enough to put it within a day's rally of testing its last high.}
The volatility index, the VIX, underlined the rush back into the market with a 10.7% plunge well below the 15.35 pivot. The move was a perfect continuation of Friday’s fade. My only new bearish trade on the day was to triple down on my Pro Shares Ultra VIX Short-Term Futures ETF (UVXY) call option (needless to say I cycled through some other call options which are accompanying short shares!). These UVXY calls expire on Friday, so they are even more speculative than usual.
{The volatility index, the VIX, headed straight toward its recent lows in a sharp extension of the previous trading day's fade.}
AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), confirmed the rush back to “risk-on” trading by leaping from 54.1% to 63.0%. Suddenly, my favorite technical indicator is within sniffing distance of overbought levels (above 70%) all over again. In my last post, I noted how AT40’s rapid drop the previous 3-5 days generated a condition that “felt” oversold. I never even thought about trying to trade that “quasi-oversold” condition from the long side. If I had, I would have taken profits as quickly as I took last week’s profits from new bearish trades.
Now, as bears sit up straight and take notice, I will be watching to see how the S&P 500 (SPY) challenges its 2019 high, a high that was set on the first day of the month.
Stock Chart Reviews
Apple (AAPL)
My bearishness restricted my weekly play on Apple (AAPL) call options to a single call. My very optimistic profit target of a double was exceeded with a close with a triple….and AAPL was just getting started. The stock made a definitive statement with a close on its high of the day and a new 3-month high. As I like to say, it is hard to stay bearish when AAPL is in rally mode. So, AAPL has put me on notice that the S&P 500 is likely to soon, and easily, challenge its 2019 high!
{Apple (AAPL) jumped 3.5% to close at a 3-month high.}
Alphabet (GOOG)
Alphabet (GOOG) gained less than AAPL did, but the stock looks more impressive. GOOG broke out to a 5-month high and confirmed 200DMA support. The stock looks like it built a strong base from the wide consolidation underneath the 200DMA. GOOG is a buy-the-dip stock now, so it will NOT be on my list of stocks to short unless it drops below its 200DMA again.
{Alphabet (GOOG) soared 2.9% and closed at a 5-month high.}
March 11, 2019 by Dr. Duru
AT40 = 63.0% of stocks are trading above their respective 40-day moving averages (DMAs)
AT200 = 41.8% of stocks are trading above their respective 200DMAs
VIX = 14.3 (10.7% drop)
Short-term Trading Call: bearish
Stock Market Commentary
The stock market’s scramble for support worked bigtime today.
In my last Above the 40 post, I described the dilemma facing my flip from cautiously bearish to bearish for my short-term trading call. The stock market wasted no time in forcing me to stay my hand right in the middle of the rule I established to guide bearish trades: wait for a breakdown or a test of key resistance. Bears like me were clearly put on notice with today’s trading action. It looks like my next bearish trade will be at a test of resistance. If THAT resistance gives way, then I will be forced to flip neutral and watch the stock market go right back into an extended overbought trading spree.
The S&P 500 (SPY) soared 1.5% as it leaped over its 200-day moving average (DMA) in picture-perfect form.
{The S&P 500 (SPY) gained 1.5% as it reached for its last high which is now the next resistance level.}
The NASDAQ (NDX) did the S&P 500 one better by gapping up and through its 200DMA and closing with a 2.0% gain. The tech-laden index tapped the lower bound of its upper Bollinger Band (BB).
{The NASDAQ (NDX) gapped up strongly enough to put it within a day's rally of testing its last high.}
The volatility index, the VIX, underlined the rush back into the market with a 10.7% plunge well below the 15.35 pivot. The move was a perfect continuation of Friday’s fade. My only new bearish trade on the day was to triple down on my Pro Shares Ultra VIX Short-Term Futures ETF (UVXY) call option (needless to say I cycled through some other call options which are accompanying short shares!). These UVXY calls expire on Friday, so they are even more speculative than usual.
{The volatility index, the VIX, headed straight toward its recent lows in a sharp extension of the previous trading day's fade.}
AT40 (T2108), the percentage of stocks trading above their respective 40-day moving averages (DMAs), confirmed the rush back to “risk-on” trading by leaping from 54.1% to 63.0%. Suddenly, my favorite technical indicator is within sniffing distance of overbought levels (above 70%) all over again. In my last post, I noted how AT40’s rapid drop the previous 3-5 days generated a condition that “felt” oversold. I never even thought about trying to trade that “quasi-oversold” condition from the long side. If I had, I would have taken profits as quickly as I took last week’s profits from new bearish trades.
Now, as bears sit up straight and take notice, I will be watching to see how the S&P 500 (SPY) challenges its 2019 high, a high that was set on the first day of the month.
Stock Chart Reviews
Apple (AAPL)
My bearishness restricted my weekly play on Apple (AAPL) call options to a single call. My very optimistic profit target of a double was exceeded with a close with a triple….and AAPL was just getting started. The stock made a definitive statement with a close on its high of the day and a new 3-month high. As I like to say, it is hard to stay bearish when AAPL is in rally mode. So, AAPL has put me on notice that the S&P 500 is likely to soon, and easily, challenge its 2019 high!
{Apple (AAPL) jumped 3.5% to close at a 3-month high.}
Alphabet (GOOG)
Alphabet (GOOG) gained less than AAPL did, but the stock looks more impressive. GOOG broke out to a 5-month high and confirmed 200DMA support. The stock looks like it built a strong base from the wide consolidation underneath the 200DMA. GOOG is a buy-the-dip stock now, so it will NOT be on my list of stocks to short unless it drops below its 200DMA again.
{Alphabet (GOOG) soared 2.9% and closed at a 5-month high.}