During this entire correction, prices have been moving from moving average channel to moving average channel. I have been using these to create my risk/reward trades, and it has been been exceedingly helpful during these volatile times. I have found it is much easier to predict the flow to and from moving average channels then it is to predict overall market trend. So! That being said, lets get into it.
I still had half of my buy from last thursday when the market opened today, because I wanted to see how the price reacted to the 150 SMA/EMA channel. The market gapped down below the 150 moving average, which has happened before during this correction so I did not take an immediate position. Last time it gapped under the 100sma, it popped right back over it once the regular (read non-futures) traders took over, so I wanted to see if it could repeat this bounce. Instead, the 150 EMA said "GET THAT OUTA HERE", and rejected the price hard. This caused me to sell thursday's longs and go short. Blah blah blah lets get to tomorrow:
We are going to test the 200SMA/EMA channel. It would be incredibly surprising if we didn't, which is why I have no position right now in expectation of this test. If we move over the 200EMA, it would be a buy upon falling back to support at the 200EMA. Most likely, we hit the 200 SMA or 200 EMA and bounce off hard, falling back down to the 250 SMA/EMA Channel. My trade would be to go short as soon as a rejection has occurred, with the 200EMA as my stop loss and switch to long.
I would sell the short in the 250 SMA/EMA Channel, and once again wait for a price break AND THEN rejection before a new short or long.
As always, I will try to give you both sides of the trade, because per usual, there is money to make in either direction and no matter what anyone tells you, no one knows the future and trading like you do can only lead you to losing money over the long run, relatively (law of large numbers).
Is there a point when I will stop trading these moving channels? Yes! When earnings come in! I mistakenly thought they started this morning, but upon waking up and checking earnings, I found no companies of REAL importance. Lets do a little earnings rundown:
Premarket April 2 earnings:
Total market cap of companies reporting = 3billion (meh!)
AVG Earnings Reaction: -1.24%
Notable: Four companies reported guidance, all negative (!)
Postmarket April 2:
Market cap: 4.5ish billion
Notable: Switch (SWCH) Big miss
Looking forward:
The first real impactful earnings come on Wednesday, with around 40 Billion in market cap reporting, including AYI, KMX, LEN, OLLI, and NG.
Thursday we have 70 Billion in market cap reporting, including Monsanto's huge 51.44 Billion cap itself.
Anyways, here are the trades. We should know more about earnings later this week, but really wont get into the true earnings season until the banks report on the 12th and 13th. Until we get positive earnings, we are likely to go fall further, but once again I am only trading on risk/reward in short day/swing cycles, mostly using these moving average channels.
Per usual, this has been for educational or entertainment purposes only and is not a recommendation to buy or sell.
Comment:
Reverse Head and shoulders pushes the price back above the 200 SMA/EMA. This is a buy if it shows support at the 200EMA. Stopped out of my last trade, now long as long as we stay above the 200EMA. Might add trailing stop or pyramiding... considering.
Not a recommendation to buy or sell.
Not a recommendation to buy or sell.
Comment:
Update: Short trade, due to double top at the .72 retracement. Daytrade, via SPXS, goal = 1% Gain down to the .5 retracement.
Disclaimer: Not a recommendation. For educational/ entertainment purposes only.
Disclaimer: Not a recommendation. For educational/ entertainment purposes only.
Comment:
Last snapshot was a little unclear, I took a new one:
Not a recommendation to buy or sell.