January 20th, 2016 Watch-list
Evening Traders! We saw essentially a Doji candle for the market today, closing up slightly for both the DJIA and S&P 500. Like we discussed last night, with so many daily support levels being broken, it can be beneficial to analyze some different time frames to try and get a better grasp of potential reversal points. For example the 1 hour chart is one we discussed and can be one to look at as a leading sign of a potential reversal on the daily chart. When we look at the 1 hour chart for today notice we failed to set a higher high, however we did hold that 15842.11 low on the DJIA chart. If we can see it hold that level and go up and start forming higher highs, it could be the start of a short term uptrend for the market following the big collapse. With that said does it mean we are done with the big selling? Not necessarily. There still is a lot of fear and anxiety with traders and investors so continue to be cautious. Lets watch for a break and close above 16171.96 going forward to signal a higher high on the 1 hour chart for DJIA. If we can start forming those higher highs on the 1 hour, the daily will follow suit. I'll repeat what I said yesterday, I do expect to see a market rally within the next 6-9 market days, however I won't be putting too much into a potential longer reversal topside and expect a lower high to be set on the reversal topside. The 1 hour, daily, and weekly DJIA charts are below along with the Daily and Weekly S&P 500 charts.
Current Below $20 Plays:
BDN: This one is sitting solidly within our buy range at this point with 2/4 indicators curving up. Selling volume has been on a steady decline the last few days. Keep an eye on those indicators moving forward. If we do see a topside move, watch the 15 min chart for a potential entry on a pullback after the initial push. Remember, you'd want to see a higher low form on that 15 min chart.
BLDP: Student request play that we've been monitoring for the past few days. Has started to work its way down into the labeled buy range. MFI finally starting to come down as is the RSI. For those interested in playing, understand it is higher risk so treat it as such and go in small. Wait for the clear 3/4 buy signal. Same thing for this one, if you see a strong push that shows a daily buy, be patient and wait for a pullback on the 15 min chart. If a higher low forms and a 3/4 15 min buy is given, take your entry.
Current Above $20 Plays:
CHD: This one has seen a decent move the past two days. At this point we're seeing 2/4 indicators curving up. If you do decide to take an entry, consider opening a countering position in one of our inverse market ETF's to give yourself some protection if the market sees a big fall further. Typically go in with a smaller amount into the countering ETF. It is merely there to offset some of the risk, not remove it completely. Remember, it also limits your potential reward.
AER: We saw this one continue to fall today and break below the bottom end of our labeled buy range. With not much solid support below the current area, we are not going to adjust the buy range at this time and are going to let this one go for now.
KO: This one has been somewhat of a long shot for us as we've been hoping to see it come down further and settle for us, but we are still positioned, if the market does continue to fall, to grab this one if it comes down with the market. Keep on watch.
VMC: This one ended up gapping up outside our buy range before falling down back into our buy range to close out the day down 1.57%. Continue to keep on watch for a potential topside reversal. As usual, if a daily buy is given, watch the 15 min chart for a pullback following the initial push. Look to take your entry as a higher low is set on the 15 min chart. Consider entering a countering position in one of our inverse market ETF's as well to reduce risk in-case the market does continue to get hammered going forward.
Some strategies to consider moving forward:
As we've been discussing, make sure to watch the "Trading the DJIA", "Trading the S&P 500" and "Introduction to Hedging" videos moving forward. They can be beneficial for those trading above $20 with larger trading accounts especially. Also, if we do see the market settle, we do have some options to take advantage of a rally topside in our correlated DJIA and S&P 500 ETF's discussed in the videos listed above. Treat them just like you would a regular chart and look for a 3/4 daily buy signal. Remember if it sees that initial push, wait for the 15 min pullback, and If a higher low forms on the 15 min chart and a daily buy is still there, take your entry. Also, not to make things too complicated, but those with larger accounts who choose to play a correlated market ETF, consider also opening a smaller position in an inverse ETF as well to reduce risk. Just something to consider. As usual, if you have any questions, let me know!
