Hey Market Pilots,
This Market has been amazing when moving up, and disastrous when pulling back. Great positions and tickers will suddenly implode on you and go negative in your account if you aren’t proactive about profits and exits. Just ask me how I know. But there are a few key metrics that I have picked up and now rely on in this Fed fueled market to help protect me and keep my account ratcheting up. Because of those tools, my spidey senses are tingling and we should be trading with caution right now.
As an example of how treacherous this market can be, take a look at the action on Monday the 13th, then take a look at Wednesday the 15th. Right. Moving on.
Now that that has happened and “refreshed” the market, there was a nice climb up for the past week or so. It wasn’t super exciting on the surface; in fact, it was quite subdued but the SPY broke to new highs. This made for a bit of a buying frenzy overnight which pushed the SPY to a gap open on 7/21/20.
I love strength like that, but this market doesn’t like to be up high for too long and when it decides to come down, it does so in a hurry. Other than the third ATR, my issue is with price floating over the Hourly 50 SMA ever since the bounce from the Monday the 13th drop. This condition will need to be corrected at some point. Price simply does not stay off the Hourly 50 indefinitely.
Now, it could be nice and flag sideways till the MA catches up. But that has not been its behavior since coming off the March lows. Instead, they tend to have things look really nice, like an inviting storefront that you may want to visit and purchase some goods. And so you venture in, pleased with all the nice items for sale. Only to drop the front security gates, turn off the lights, take your money, and spin you out onto the sidewalk.
One thing I always tell my Moxie Mastery subscribers: just beware when things look the best. That is usually the time to cash in and wait till things look the worst. Remember, it is our job to buy when no one else is, and sell when everyone is buying. Right now, that untouched Hourly 50 is telling me a reckoning will come and I want you to know how to see it coming.
Over and Out,
Your Profit Pilot