Stock Setups for Tuesday Feb 2
We got a nice bounce higher today but that is not all you should be looking at. Here are the real important things you should be looking at to understand the quality of today's movement higher.
Here are the positives:
#1 For starters we did get a nice percent move. Over 1% on all the major indices.
#2 The Nasdaq trended higher all day
#3 The Nasdaq closed at its highs for the day
Here are the negatives:
#1 the Move higher was on lighter and below average volume.
#2 Today's movement did not even reach the top of Friday's trading range which is negative
#3 Today's movement paused right below the 100 day moving average.
#4 Today's move couldn't get back even 1/2 of Friday's move lower.
#5 Many of the leading stocks above average moves were on good volume (Positive) but many of those charts look terrible and could in many cases be written off as short term short covering.
5 MINUTE CHART- Short Term Trend
So what we have here is an uptrend for the short term but looking at the intermediate and longer term charts shows us that the market is breaking down and topping. This is not a done deal here but this short term light volume bounce could lead to heavy selling at resistance levels.
Once again you need to remain very disciplined and get the market trend on your side each and every day you decide to participate in this market. If the short term trend is working then make sure you trade only for the short term. If the longer term trend improves then you could look to become more aggressive and give your trade some more wiggle room on your stops.
As of now we are trading only in the short term time frame and only if we choose to be very aggressive. We understand that if any of these trades trigger and reverse then we would look to close them out with only around a 2%-4% loss and nothing more in this market. Our strategy for taking profits over the short term is to take profits on at least 1/2 position on any quick move we get and move our stops to breakeven. Since we are still in a weak market we would probably look to book profits on the entire position when they occur.
We would attempt to make some quick trades if the following stocks trade above the following prices.
GG 35.71 Would look for a only a quick move back to the 200 day MA and would close near resistance level
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