There isn’t much really happening in the markets this week as we bounced off of the S&P 500 2800 support level this week to see the market in a holding pattern for the moment. Almost everyone is bullish now and if not bullish than they are asleep with no care in the world about any risks in the market.
I did a video for Power Investors members last night about an indicator I am watching. If it triggers than we’re likely to see the market head to the December lows before year end and if it doesn’t then we can see the market float for months to work off the overbought technical condition it reached last month.
Here are two interesting charts I’m watching now.
CLPR is a REIT stock that is still consolidating. It pays a 2.8% dividend.
And TSLA is still broken, still dropping, and still headed likely to zero.
I have a bear call options trade for TSLA on as explained in this video.
The lesson with these two stocks is that it might be tough to trade the market averages now at this moment so the place to look for trading opportunities is in individual stocks.
Notice how one of these stocks has rising relative strength against the stock market while the other has declining relative strength, meaning that it is lagging the market averages.
This means that if the stock market were to have a correction before this year is over that TSLA is likely to collapse when it happens.
As I have been saying recently – this is the time to try not to get caught up in news stories – don’t buy because the DOW is up 100 points and someone is on TV talking about a Trump tweet, but when you see trading or investing setups that come to you. Successful trading means knowing the tactics that came before you to navigate the markets and forming your own principles to guide your decisions by.
My book Strategic Stock Trading can help you do this. This book lays out the simple methods and key indicators I continue to use to keep on top of the trends of the market and to identify the best stocks to buy.
If you take advantage of my special book giveaway offer you’ll also get into my private trading group and receive tomorrow’s video update my coming trade alerts to take advantage of it.
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