MAKE LOVE NOT WAR...
Well it really happened...not that there was no war earlier but this time some big boy have recognised and supported separatist to seize on a country. Whatever the reason, whether going back to byzantine era or even former USSR to make claims on a sovereignty, war is not something anybody wants especially during modern times like this.
It makes things worst now by putting sanctions and seizing assets of Russian companies and individual. What have these got to do with the decision of a single or group of men governing the country? I can't imagine if anyone whose livelihood is affected by a mere decision of a few. I don't think the citizens should be punished. Do you know some countries are really run by a bunch of fools at the top? Anyway lets not get political.
Our best of hope for the citizens of Ukraine and also Russia.
"Make Love Not War"
SPX
Wow last week was just crazy, the market just turned the opposite. Past few weeks was 3 days up 2 days down. Last week was 3 days down and 2 days super up.
On Wednesday last week, SPX hit around 4222 level and stopped just right on dot at the previous low in January. The next day 24th February, when market opened, panic selling started because of the Ukraine invasion by Rusia triggering a huge market selloff, where the SPX dropped 2.6% on opening. All, I could hear is the Yahoo app notifications triggering for almost every stock I know 52 weeks low, 52 weeks low, 52 weeks low....just kept popping. If you are not sane, you would probably freaked out and chopped as many position as you can. Funny thing when I was watching is the already very beaten down stocks was going up instead. One of it was PLTR, on a 2.6% market down it was going up....not a normal sight in past where this stock gets selldown with the rest of market on downdays. Adobe was also not selling off as usual with few points up, pretty odd. It is a sign that some of these stocks the sellers and speculators are already all gone at these price levels leaving behind the strong holders which could not be bothered even if other stocks are dropping like flies.
The market rebounded very quickly up thereafter and at end day, market was up 4.3% from its day low. Closing day with a very big bullish candle. Market continued to rally till end Friday.
Here's a sight of market last week, mostly ended week with green. With uncertainties no longer uncertainties, the market had had a relief how the world has acted against the war, by sanctions and not by making more countries into war.
NDX
7% movement in a day from low to high last Thursday. From the all time high to the lowest point hitting was 22%, 20% retracement is a mark point for a bear market. For sure, last Thursday have scared many market longs into cutting position. Especially when the drop on market open was 440 points.
But the bounce up was also very quick, in less than seconds after gap down. I guess there are many market stop loss points placed and market makers cleared everything one shot and then pushed the market up.
At the current close of 14189, market took 3 months to come down 15% and only took 2 days to go up 8%. So as we said earlier, the downs are long and painful and the ups are going to be very quick always.
NDX may need to break 14400 level before a more confirm wave up continues. With 3 weeks before the rate hike, expect some more volatility. But I would expect similar situation is possible, uncertainty = volatility. If there is no longer uncertainty, market may continue to move upwards regardless of what rate is finally decided by the Feds. Because the earlier bad expectation is already all factored with the more than 15% retracements for past 2 months, and when the actual is known market will no longer be tied to anything. In any case, lets see the price action closer to the event and play along then.
Also reminder, the Ukraine war thing is far from over. One misstep by some not so smart person in NATO might piss off our dear Putin into doing something undesirable and crash the market. Anything is still possible there.
BEAR CALL SPREADS...
We may continue to play volatility using bear call spreads on SPY or even QQQ. On upswings hitting resistant points, eg. previous high place a bear call spread delta 20 tp 30 above current price. Use the M double top patterns as an execution trigger. Exit after the pullback happens. Generally short trades less than few days to a week for 50% profit target, with limit exit orders in que. With the volatility even more on SPY and QQQ, the possible exit days will even be faster if we catch the right wave, even on intraday. Refer to Traders Talk below for the M pattern identification.
TRADERS TALK
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We had a great topic and so much insight on trading was given out.
Listen to Traders Talk Series 37 if you have not done so. View Past Traders Talk
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