Yesterday began with another nasty gap down opening as negative sentiment carried over into Monday.
But by the close the market reversed.
The stock market support level I talked about last week on the S&P 500 held!
And the robots and daytraders saw that and bought.
Take a look at the chart.
The S&P 500 not only held support again, but it did it with the daily stochastics momentum indicator oversold.
And it is oversold on the DOW and Nasdaq too.
So after the June dip to support we are likely to see a rally in July.
I thought it would start in the middle of the month when earnings start, but the current market setup makes it so that it may instead actually rally INTO earnings.
However, if the July rally doesn’t bring an improvement to the internals of the market then it’s going to end in a Fall bust.
But that’s something to worry about later.
The market closes early today ahead of the July 4th holiday so it’s hard to expect much action today.
Really many traders are taking the whole week off.
Now I got my eye on pair trades and that means potential shorts and longs.
For a short I still have my eyes on Tesla.
I shorted it a few months ago and then got out right at the start of last month as the trend turned up and shorts got squeezed. But I’m looking to short it again.
I know Elon Musk predicted that there would be a massive short squeeze once he reported that he was able to produce 5,000 Model 3 cars, but things didn’t exactly work that way on Monday.
He announced the news as he said he would do, but the stock simply gapped up and sold off on the news!
I’m sure Musk is miffed.
Look at the chart.
The big run in Tesla happened in June with the short squeeze and TSLA momentum traders buying ahead of the Musk production news.
So when that news hit people sold, but more important I’m sure professional money managers who have been holding this stock for months took the opportunity to sell on the bid and get out of this turd with growing debts and a crazed valuation that makes the company worth more than Ford and General Motors.
It’s nuts, but it’s a testimony to Musk’s self-promotion skills.
He is a master of twitter – last week he tweeted that he was thinking of making a Tesla truck and the stock went up 5% that day – but is he a master of creating a sustainable profitable operation?
Now the stock has short-term support at $330 and resistance at $370.
It’s likely to trade in that range for a week or two before making it’s next big move.
And if it closes below $330 that move is going to be a total dump.
So that’s why I’m watching it closely now.
When you do pair trades you go long with a portion of your account and use some of it to bet against junk stocks like Tesla.
What about buys?
Well today I’m happy to tell you that Matt Morris is running a July 4th special to get you into his trading service at a huge discount.
I talked with Matt last Thursday in a posted youtube interview about how he picks out his stocks and the types of things he looks for to determine when a big rally is likely to happen in them. That way he buys ahead of the move.
He has more details about what he does on his website Microcapmillionaires.com for you to check out.
To grab his special offer go here.
