DAILY MARKET RECAP
Thursday June 2, 2016
The following is be used for Informational purposes only. The charts are fact, however my interpretation is an opinion which I am sharing with readers. None of this is a recommendation to buy or sell anything. You must do your own due diligence.
Key Developments :
- Another Gap down bought as S&P grinds into April 2016 Highs of 2011
- Absent any bearish price action we have no choice but to focus on the bullish setups.
We have the NFM number tomorrow morning, so could prove to be a big factor in setting up our next big move. However, absent the presence of any bearish price action, we must continue to focus on the bullish patterns in front of us until we have reason not to. Yes, we are grinding into major resistance (April High) but certainly no reason to be blindly short. If this pattern somehow fails the market will show it’s hand, there is no doubt in my mind.
That being said, this close to a major resistance level, I am keeping a neutral posture, with a small long DJIA position. There is no bearish price action, yet the S&P is running into major resistance, and has not been able to clear these swing highs since May 2015, so why press here until they prove it. I will add to my long if we breakout.
This is what we are looking at right now, and have been all week, since we first discussed the potential in the weekend journal.
THE DJIA is by far the cleanest read in my opinion. A nice inverse H&S holding the VWAP off the 5/19 lows. As long as that remains true, I will keep a bullish posture. I nibbled long around 1:30 PM est and am holding it, will add on breakout.
In the mid-day refresher, I talked about trying to short NASDAQ, which I did and stopped out for a small loss. I short what looks like a right shoulder because I love the risk reward.
Here I got out for a very small loss and then nibbled DJIA long.
The Bottom Line:
The big picture remains bullish to neutral. Neutral only because of the lurking April Highs. However the Russel had no issue blowing through them. We have patterns that have the potential to take us much much higher with very good risk rewards, so I continue to lean bullish bias until I see reason not to. Yes, I have tried a few cute shorts this week, these plays are being bought, which tells us a lot right now. Maybe these patterns trap like the bearish pattern last week. Very possible in a range bound environment, but that is why we try to pick spots and honor stops. The last thing we want to do is miss a big move because we are scared of a trap. The market will show it’s hand if it’s going to trap, and right now, the picture remains bullish.
Chart of the Day:
$M – MACYS
On May 24th I posted a blog post while Macy’s was forming a right shoulder above the VWAP from the lows. As long as we could hold that rising vwap, I wanted to be long it with a target of 34.08. That target was acquired today in 6 trading days. These are the kinds of setups I look for on all time-frames. Here is the original post for your review.