Market Overview and Focus For Week of 12th December
Listen to the market's feedback.
Hi all! Hope everyone had a great weekend and is now fresh and ready for what the market may have in store for us this week.
Since the large gap-up in the general market on November 10th, which was a valid follow-through day, the market has struggled to show any continued strength off the back of that. When the market showed another extremely strong day of buying, on November 30th, my expectation was that would then act as the catalyst for a sustained upward move, or at the very least, a tradable rally.
Now, while there have been certain opportunities to take advantage of and convert into an equity curve spike, there hasn’t been the continuous broad-market encouraging action we are looking for just yet.
The poor close last Friday has reduced the abundance of setups severely, not that we were overflowing with opportunities prior, but the poor DCR from Friday had a generalized negative impact on the overall quality of setups.
What we can see here is a clear rally up to the KMAs followed by a clean rejection with weakness leading to the poor close we witnessed.
One area I am watching is that around the trend line I have drawn, a break below Friday’s low and that trend line would make it even more difficult for individual stocks to make any sort of progress to the upside.
On the bright side, the indexes are once again not telling the story. As opposed to late last year, where the general market kept marching up with very poor individual stock action, we are actually witnessing the opposite of that right now.
Despite the facts that breakouts are still failing and it still being quite a difficult market environment to get any sort of meaningful progress on positions right now, there is no doubting that individual stock action is much better than what the general market indexes may make one believe, and that is encouraging.
In no way am I saying that we have the healthy market leadership that is necessary for any sustained uptrend just yet, but we are heading in that direction, certain industries such as solar and biotech are showing pockets of strength, even if that may be short-lived at times.
It is essential to keep up with your daily routines and market analysis in bear markets, finding the stocks and industries showing relative strength is a key element to large profits in bull markets.
Focus for Week of 12th December
Coming into this week, I plan to do less trading than last week, I am coming off the back of a nice jump in my Equity Curve and my focus is now on maintaining that as it is important to be aware of the fact that the many traders get complacent and let their guard down after a good run, which is why biggest losses often follow biggest wins.
Along with this, I see very few high-quality setups and just do not feel as though it is worth risking much, focus is still on progressive exposure and getting feedback from your own trades.
NINE 0.00%↑ - A few days of tightness could really set this up nicely for some further upside after a +375% move in less than 2 months. Had a nice shakeout day with the big down day on November 21 with a simultaneous undercut and close above the 20EMA and subsequent support at this area. Will be watching for a break above its downward trend line.
CECO 0.00%↑ - One of my favourite charts I came across during my weekend routine, rallied +220% off the May lows showing it can really move when it gets going. Now holding above its prior base and starting to flag out above its KMAs.
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