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Closing the gap

www.trading-adventures.com

Closing the gap

Weekend Market Review November 18, 2022

Andrew Moss, CMT
Nov 18, 2022
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Closing the gap

www.trading-adventures.com

Welcome to the weekend.  Let’s catch up on some current events.

  • Bitcoin is still crashing

  • FTX, the cryptocurrency exchange, and the celebrities that promoted it are being named in lawsuits

  • Sam Bankman-Fried (SBF) - the CEO of FTX - is having a meltdown in real time while trying to justify his actions

  • Elon Musk closed the Twitter offices for the weekend after giving the remaining employees a stiff ultimatum. And people seem to be in awe of the fact that the platform is still operating

  • The government of Qatar has told World Cup fans there will be no drinking allowed; AFTER the fans and players got there. One beer couldn’t hurt, right? How stiff could the punishments really be?

Wow! That's a lotta headlines for one week.

What did they do to the stock market? Let's take a look.

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The markets

The major indexes closed the extension gap and today are mostly chopping around on the upper side of the 8-day EMA. The action doesn't feel especially good, but a rally into the close helped. And as long as prices are above yesterday's low, and even better, the aforementioned 8-day EMA, the short-term momentum is still with the bulls.

$SPY - danced around and ultimately closed just below the March high anchored VWAP

$QQQ - Closed right above the August high anchored VWAP

$IWM. - Closed the week just above the 8-day EMA

$DXY - Chopping sideways all week

$VIX - bounced on Tuesday, but the trend is still lower

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Bull and bear case

I was asked earlier today if I thought the move from 11/3 to 11/15 and the bullish consolidation pattern from 11/15 to today, 11/18 formed a bull flag pattern.

This is one potential bull case. The implications of that pattern on SPY could result in a potential measured move price objective in the $425 area. While it is a possibility, it's not the cleanest of patterns.

It could also be disrupted by the longstanding downtrend line and a downward-sloping 200-day MA along the way.

A better potential bull case is found by looking at the same pattern beginning at the October 13 low and extending into next week. This higher probability scenario aligns more closely with the bigger picture and shows a price objective that is in close proximity to supporting factors;

  • the downtrend line

  • the 200-day moving average

  • and the historically strong Thanksgiving holiday week

The short-term bear case is simple. If prices get below the 8 and 21-day EMAs, and the low from CPI day - Thursday 11/10 - then momentum is gone and a move lower becomes much more probable.

We'll see how it shakes out.


What I'm reading and listening to

Last Saturday I chatted about the markets with David Yocum - @YocumsCharting.

David knows his way around the charts and is a great interviewer.

We talked about

  • Stock Market indexes

  • some individual names

  • the Real World vs the Virtual World

  • some key market areas showing relative strength that should have your attention

Have a look!

Keep up with David on YouTube and Twitter. He’s got a bright future ahead of him in technical analysis and trading.


From Twitter

Patience is still THE most important skill in trading

Twitter avatar for @MoneyTradeEdge
MoneyTradeEdge | Better Thinking Better Trading @MoneyTradeEdge
Patience improves your execution. Patience reduces your mistakes. Patience helps you controlling your emotions. Patience is the most important trading skill.
4:30 AM ∙ Nov 13, 2022
818Likes172Retweets

The next most important skill in trading is Position Sizing. I've studied position sizing intensely over the years. I still picked up a ton of new and useful knowledge from this book.

Twitter avatar for @Andy__Moss
Andrew Moss, CMT @Andy__Moss
Look what came in the mail! This one has been on my list for a long time. Time for some more studying. 🤓✍️ 📝 @VanTharpInst
Image
5:48 PM ∙ Nov 12, 2022

Everybody loves a spontaneous eruption of “Take me Home Country Roads.” Even in Germany.

Twitter avatar for @espn
ESPN @espn
The entire Allianz Arena singing “Take Me Home, Country Roads” is incredible 🙌 (via @JennaLaineESPN)
5:40 PM ∙ Nov 13, 2022
22,392Likes2,974Retweets

Find what works for you 😂

Twitter avatar for @thesamparr
Sam Parr @thesamparr
A 50-year-old runner, known as Uncle Chen, ran a marathon this weekend in 3 hours 26 minutes, smoking cigs the entire time. Afterwards, was giving competitors wedgies and crushes beers.
Image
12:09 AM ∙ Nov 16, 2022
1,049Likes79Retweets

Anything else?

I’m including more links than usual this week as I’ve been very busy sharing lots of educational material. Here’s a partial recap in case you missed any of it:

  • Will the magazine covers be right again?

  • Want to learn more about extension and how to use this concept to improve your trading?

  • How about relative strength?

  • We hear a lot about 0DTE and gamma these days. This video explains why traders pay attention to it and how it can affect markets.

  • The Chart Report is the best daily market recap for chart lovers. Patrick Dunwila and his team curate the best technical analysis from the day and send it out in a quick, easy-to-read note. And I'm not just saying that because they were nice enough to include my work on 3 of 5 days last week. 😉 😂

If you want to read more of what I read, sign up here.

The Chart Report


That's it for this week.  Thanks always for reading, subscribing, and sharing with your friends and family.  And don’t forget - Weekly charts every Saturday morning. Come clarify your big-picture view and get ready for the coming week — historically one of the most bullish of the year!

Have a fantastic weekend.


***This is NOT financial advice. NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.

Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”) a SEC registered broker/dealer and member of FINRA/SIPC.  All trades placed by Mr. Moss are done through T3TG.

Statements in this article represent the opinions of that person only and do not necessarily reflect the opinions of T3TG or any other person associated with T3TG.   

It is possible that Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed.  This may reflect the financial or other circumstances of the individual or it may reflect some other consideration.  Readers of this article should take this into account when evaluating the information provided or the opinions being expressed.

All investments are subject to risk of loss, which you should consider in making any investment decisions.  Readers of this article should consult with their financial advisors, attorneys, accountants or other qualified investors prior to making any investment decision.   

POSITION DISCLOSURE

November 18, 2022 4:15 PM

Long: COIN122P45, QQQ1125C285, SPY1125C395, DKNG1216C15, PYPL1216C90, SHOP1125C37.5

Short:  COIN122P30, QQQ1125C300, SPY1125C405, DKNG1216C20, PYPL1216C100, SHOP1125C45

Options symbols are denoted as follows:

Ticker, Date, Call/Put, Strike Price

Example: VXX1218C30 = VXX 12/18 Call with a $30 strike

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Closing the gap

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EDWARD PAGE
Nov 19, 2022Liked by Andrew Moss, CMT

OMG-Can you not change the colour of your chart background. Puke gray mist really ruins your good content. I'll bookmark when you fix this.

ED

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Andrew Moss, CMT
Nov 19, 2022Author

Thank you very much for your feedback Ed. I am honored that you feel such passion about my charts.

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