Tim Reazor
Chief Investment Strategist
Noram Asset Managemen
The markets are at a decision point. You are most likely at a decision point. Let’s talk about the S&P’s and Nasdaq first. If you’re trading or investing with a shorter timeframe you should be concerned. The S&P futures are clinging to the 8-day exponential moving average (EMA). If the 8-day EMA breaks look for a flush to the 21-day EMA which is around 1847.
The Nasdaq is in a more precarious position. It has broken the 8-day EMA. The Nasdaq futures are sitting at 3688 – a move to the 21-day EMA is a quick 20-point drop to 3661.
So what does this mean for the short-term stock and options trader / investor? Trail your stops. Honor your sell triggers. Don’t fight the market. This is easier said than done.
For the shorter-term trader – especially those trading ETFs like UPRO and TQQQ – you’ll want to see 21-day support hold tomorrow. Two closes below the 21-day ema and it is most likely time to end the trade.
For investors and traders with a longer timeframe – We’re simply digesting gains. The S&P’s have found support at the 10-day simple moving average (SMA). The Nasdaq has broken the 10-day SMA, but is consolidating nicely on the weekly chart.
What are you longer-term investors to do? Once you know the trend set your course. If the market stabilizes and moves higher you can add to positions that have two consecutive closes above the 21-day EMA. You can also add to positions that are bouncing off of the 50-day SMA or 10-week SMA. Only add once the trend is moving higher. Three out of four stocks will follow the general markets trend. If you add and go long and the markets are moving lower – you have a 75% chance of being wrong. Don’t guess a direction. Wait for the trend.
A quick update on TSL and JKS and CMG – I discussed these on my radio show this week. On the weekly chart TSL has reversed lower and is finding support at the 8-day EMA and is still above the 10-week SMA.
JKS has found support at the 8-day EMA and is finding support at the 10-week SMA.
CMG is pulling back in light volume is acting normal for a stock that has made a tremendous run.
If you have any questions please email me or talk to me on Twitter – Tim@NoramCapital.com and @TJReazor.
Best Regards,
Tim
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