Welcome to the fairground! As I mentioned yesterday, you should exercise caution in this type of tape. We had a strong opening with some red to green trades, which created some cash flow. However, at the touch of a button this constructive action switched abruptly into a bear trap, which brought everything into a downtrend. Fortunately I use a tier system and I have trimmed, but this was not enough to get me to keep all my day’s gains. I lost some but kept some. My stops were quite high which helped protect me while I was not at my desk. At the end of yesterday’s tape if you did not have stops and if you would have tried foolishly to buy any dip it would have hurt considerably. I got extremely light overnight since the levels in $SPY and $QQQ were broken, and everything was left in no-man’s land.
In the house of horrors called big tech we have a winner: Microsoft. But can it keep this sector afloat on its own? $MSFT kept above all moving averages at the bell close while the $QQQ took a nosedive. Did I take it home? No. I could not trust it would continue to fight the trend today and chose to re-engage it today should the situation change for the better. Ideally it should stay above $292.75, and to consolidate higher above $293.07. If it loses the moving averages it just follows this downtrend in tech and it should not be touched. I will look at this stock for re-engagement today but only if it stays above the lines.
The sickest tech stock out there has shown it has no interest from buyers. Everyone is running away from this elevator drop kind of move and the algorithms have only a sell move programmed for this stock. The only positive in $FB is that is did not drop all the way to its 200 day EMA. However, if it does, this time a bounce is not necessarily on the books, rather a sharp drop to the dark side. Watch $323.57 (200 day EMA) and last week’s low of $322.7 – if $FB gravitates towards these values it might bring the whole tech sector down with it and ruin any chances for a reversal for the upside in the short term.
Don’t think I did not engage $TSLA yesterday when the action showed that it could finally surpass last week’s high of $806.97. It did not and it got like a child’s rollercoaster, of small ups and downs, to get everyone -long or short – hurt. I put a sharp stop, and I got out of it. In the end thanks to my tier system, as I bought low and sold high, I managed to suffer no losses, but it was not easy. This side-ways action in Tesla is frustrating and it is very easy to lose. I recommend waiting for the moment in which it manages to get above and stay above last week’s high for you to get involved. If you have FOMO just buy some call spreads for earnings. This way you stay engaged and have a fixed and relatively small sum you can lose if $TSLA cannot overcome the adversities in this whirlwind market.
I did not go to the $SPY and $QQQ charts today as I exemplified them through these three stocks, and thought maybe you could use with some change. The main idea is that it is ‘adults’ only swimming’ kind of action in today’s market and it is very easy to lose capital without even being wrong. If you are not fast enough, if you just blink for a second, or even if you are too forgiving with your stops you end up losing money. Cash really is a position these days and you do not need to pay for tickets in order to watch this horror show, just come another time.