Weekly Commentary

publication date: Aug 24, 2019

NOTE;  All posts are opinions only.  No investment advice is given.  Consult with a financial adviser and do your own due diligence before trading.
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Market Summary for Week Ending February 16, 2020

 

This past week (2/10-2/14) was another great trading week - even better than the two previous weeks. Our chart signals gave 15 wins and 2 losses in picking short-term swing trades (long and short) on $SPY and $TVIX.  Because of focusing on elevated market volatilty, I didn't have much time to analyze individual stocks, so all action was in ETFs.  All trades were posted in REAL-TIME for subscribers at tradingideas.info.

 

 

 

As I indicated in my previous summary, last week was expected to have continued "elevated" market volatility... and and there were some price swings in both directions, but definitely less volatility than the prior two weeks.  Remember, volatility doesn't necessarily mean "down"; it means rapid and unexpected change.  Overall, the broad-based market rally continues with $SPY up 1.63%, $QQQ up 2.37%, $DIA up 1.15% and $IWM up 1.83%.  Early in the week, I identified signs that a powerful Buy Algo was still running, and the most profitable trade of the week was a long position on $SPY from Monday into Tuesday which yielded a $3.00/share profit with ITM options leverage.  Worries about the coronavirus decreased, and more importantly, global central banks continued to pour tons of liquidity into the banking system to help stabilize financial markets, giving a strong tailwind to stocks.

 

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By midday Thursday, it was apparent that the Buy Algo had been turned off, and prices lost their upward momentum.

 

 

Friday was a rather flat day, but it turned out to be the most active trading day for some of us.  Early Sell Signals on the charts indicated it was a "sell the rip" morning, and there were multiple opportunities for quick short scalps.  (I traded 5 of them.)  Then during the early afternoon, I posted this chart suggesting that a Diamond Bottom was forming intraday, and we had time for a long scalp up into the close.

 

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So... what about the coming week?  Next week is a holiday-shortened 4-day trading week with 3 OpEx's.  I think the bullishness from the late-January pullback has already played out and we'll need a new stimulus to push prices much higher.  Otherwise, the market may stall here or even pull back.  As of Friday's close, there were no official signals on the charts, but MACDs were beginning to look tired.  $SPY is up $17/share (>5%) in 2 weeks without any meaningful test of support along the way.  So, there is the potential for a pullback at any time, and we'll have to keep a close eye on the charts throughout the week to see if something develops.  One additional concern is that market breadth has been somewhat disappointing on this most recent rally to new ATHs, with the NYMO only at +5 as of Friday's close.  Some will see this as indicating we're nowhere near overbought; I'm more inclined to think that it shows internal weakness despite rising equities.  The next 1-2 weeks will be interesting.

 

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