“Real movements do not end the day they start, and it takes time to complete the end of a genuine movement. Never be afraid of the normal movement, but be very fearful of abnormal movements.” – Jesse Livermore
On the first day of February or last Friday, the market celebrated most upbeat economic news including the Job Report with nice move. Dow finally closed above the psychological level of 14,000, the S&P 500 closed up 0.7% at 1,513.17 and the Nasdaq rose 0.9%. SPY closed at 151.24. Vix dipped below 13 again. GOOG closed at its fresh new high above 775.
However, the market internals don’t look as good as the absolute gains shown on the major indexes.
Many leaders either had bearish reversals or stalled out with choppy action for the recent days, seen in PCLN, AMZN, FB, DDD, SSYS, MA, not mentioning the previous leading stocks AAPL, MLNX, VMW which barely bounced from their recent year lows. Retailers also were the weaker ones as many closed in red; additionally, the IBD 50 lost 1.1% for the week. As much as rotation is going on, stock picking is becoming more challenging for momentum or swing traders.
In an overbought market with lots of random price action with fast speed and wild swing, it is good to be aware of big gap up or down reacting to earning news as HFT (High Frequency Trading) has been playing a big role that either bring them down or up.
Following first 30-minute rule helps avoid getting chopped off . Y0u can see the picture of the wild price action in ISRG CMG on my Twitter picture section. First 30-minute rule: some big gaps related to news can be hard to interpret in first 15-30 minutes of trading, so it is good to let stocks settle before jumping in.
It’s important to be nimble and be patient with the entries levels for cushion. Keep an open mind for any price change. Happy trading to all!
Here are a few charts with my notes to share: