“The market is a battlefield. Make Sure you are on the winning side. You must trade with the actions of the market and not simply by how you might think the market should trade.” – Gerald Loeb
The U.S. market closed almost flat on huge trading volume last Friday as it was a quadruple witching day, usually boosting volume. The S&P 500 closed at 1,460.15 at its day low while it’s been in a tight trading range for days. Similarly, AAPL hit a new high $705 on its debut iPhone sale day, but it closed at around 700, an option strike price, which was also at the session low. GOOG was acting better on big volume near its day high/year high around 734.
At the market open, some stocks got upgraded, such as PCLN, GOOG, EXPE, AMZN, etc, but the BUY rating calls near those stocks’ recent highs usually make me cautious since more often the upgrades would trigger profit taking. I commented it on Twitter before the open bell. Surely, those stocks started selling off from the higher gaps. AMZN was weak all day and closed at its day low. Only GOOG was able to bounce back with a choppy trading session.
AAPL went up nearly 50 points in 8 sessions on fantastic iPhone 5 sale reports worldwide, yet it closed near its day low last Friday on much higher volume. To me and others who cares for its technical, it should be a BIG warning sign. Perhaps it’s almost priced in with exhaustion on good news. Most of my friends including me are going to get iPhone 5 for it’s a cycle of updating our old iPhones. But what else is new?
(A cute story: I have an old friend who is a really old-fashioned gentleman and has never had an email address, and has never used a smart phone or a computer in his life. He has kept using the Razor mobile phone for the past 5 years. Recently two years, my other friends and I have tried to persuade him to get an iPhone, but he refused. I used to make jokes: when he starts using an iPhone, it would be near the end of AAPL growth story since the last potential customer finally joins the customer base. Today I helped create him the first email address in order to get him an iPhone as a gift. How far and how high will AAPL go from here? I ponder… )
Being a trader, it’s important to trade what we see vs. what our opinions are. GOOG with more powerful chart is still looking for higher prices. With only 8+ points away from its old high hit in 2007, another push higher might put it in a dangerous zone for HUGE profit taking near 745-750. When it peaks, get ready for some retracement which will be healthy for a buying opportunity.
Some leading stocks which were sold off to their key support levels bounced back well, such as MLNX, KORS, and EQIX. Other lagging stocks in weak groups got sold off after huge bounces seen in CMI, CLF, JOY, etc. Rotation keeps playing the role, but many leaders look tired. It really depends on what your trading styles and holdings are for this strong trending market. It can get a bit tricky here. Additionally, transportation sector keeps weakening while SPX is consolidating without improved price action, and such divergence between two naturally makes me alert and cautious.
In the recent days, I have tried to pay attention to my trades other than posting frequently during the trading hours, and it really made difference as I was able to think more clearly and executed traders better. I also find that visualizing the better trades after the market helps big time. Always be objective!
Thanks for viewing, and trade safe and well!
Also, my AAPL daily chart was posted earlier on Stocktwits.com: stks.co/iBaV .
Here I’d like to share my GOOG chart with notes: