Set-ups and Game Plan for Week 4/18/16 – Open
This was one of two premium posts for members posted before week starting 4/18/16
I have two examples of why the market is strong and why for now buying the dip needs to be more prevalent on our minds than shorting.
- Last week many of the momo stocks and some ETF’s that I casually watch got to their high strike calls. Meaning the price slammed right into or went slightly above the highest and most prominent strike of calls. In some instances (i.e. AMZN) the buying power was strong enough to leave many call buyers joyful into the weekend. In other instance, such as GS (also GOOGL, BIDU, AAPl, & others I typically don’t show but keep an eye on), price got to 162.27 with the highest strike being 160. From there GS pulled back (others also either pulled back or held steady) and yet the overall market held like a champ.
- During every sell off last week, the dip was quickly bought and breadth was only mildly negative indicating a lack of any strength behind the selling.
At this point, as much as it seems crazy that we aren’t getting a meaningful pullback, until we begin to see a shift in selling pressure it’s going to be a struggle for shorts. The flip side to that is I also think the upside is quite limited or will be slow until either there is more consolidation or there is a more meaningful pullback. Thus, for the most part our focus will remain on buying the dip and finding select stocks that can generate alpha.
SPX levels of significance:
Price over Friday’s high (2083.22) resistance includes: 2087.84 (Thursday’s high), 2093, 2100, 2103, 2111.
Price below Friday’s high support includes: 2075, 2065. Below 2065 (especially a close below would put the short-term uptrend in jeopardy.
Price below 2065: 2055, 2050, 2043.
Set-ups: Given that I am interested in many of the momo stocks next week I have kept these limited to just a few for now.
