Potential
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The Market
Last Friday’s article, Pumping the Brakes, looked at summer seasonality and a potential reversal candle in $QQQ.
This is worth emphasizing, even at the risk of being redundant or stating the obvious. Everything in trading and markets revolves around potential. There are no certainties. No predictions. No guarantees.
As the bull market rages on and profits stack up there can be a tendency to begin to feel smart.
Don’t confuse brains with a bull market.
-Humphrey B. Neill
Staying focused on what is, and forming a plan that can deal with multiple potential outcomes is the best path to success.
With that in mind, let’s revisit the QQQ chart from Friday.
Was it extended? Yes
Was there a potential reversal pattern? Yes
Does that mean it must go lower? NO!
Everything to the right of the last candle on the chart is a potential outcome.
Patterns have potential.
Pivots and levels are potential support or resistance.
We’re operating in a world of probability, not certainty. And don’t forget, when a seemingly likely outcome doesn’t materialize, that is information too.
The Charts
SPY is once again signaling a potential reversal. Watch tomorrow’s action for confirmation. There is a very slight negative divergence with RSI.
QQQ is very strong and quickly negated Friday’s potential reversal candle. It still looks like it could rest, despite the straight-up action so far this week. It also has a very slight negative divergence with RSI.
IWM continues to be the star of the show. RSI is bullish, but not in overbought territory yet. And there is no bearish RSI divergence here.
Look at that! DIA finally broke out. Now, retest? We shall see.
The Closing Bell
One more time for those who aren’t on Twitter. My conversation with Michael Gayed is now available on YouTube.
Back with more on Friday with the Weekend Market Update.
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The Disclosures
***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 the 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
July 19, 2023, 4:00 PM
Long: SNAP0818C14, TOST0818C27
Short:
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike