The Market Doesn't Care What We Think
Midweek Market Update May 17, 2023
The Markets
What if, rather than getting the crash everyone is looking for, buyers simply focus on the better bargains and start buying up the things that are still cheaper? What if DIA, IWM, XLF, etc. catch up to the SPY and QQQ?
Walter Deemer is on Twitter today with some words about ‘crowded trades.’ He had this to share, from his excellent book “When the Time Comes to Buy, You Won’t Want To.”
Everyone “knows” the following …
Inflation is a problem
Recession is coming
The US Gov’t will default as a result of the Debt Ceiling crisis
It’s only nine or ten stocks holding up the whole market
… just to name a few.
The result is that everyone knows the market is going to crash. Or at least that it simply can’t go up. No one wants to buy stocks. Or at least no one will admit to it.
Here, we’ve been looking at the opposite. For months now we’ve been exploring the phenomenon that the market simply refuses to go down, despite having a million reasons to do so.
On top of that, many stocks are now actually breaking out. And getting some follow-through. We haven’t seen that in a while. Visit my Twitter if you’d like to see the charts.
So consider these words from another very wise trader, Tom Canfield.
Be dumb. Follow price.
The stock market doesn’t have to make sense. And we don’t always have to understand the story. That’s the beauty of the charts. They give us a way to look past the noise. To find setups that fit our systems, take the trades, and manage the risks.
The Charts
SPY - Healthy action for SP 500 stocks as they move towards the critical line, again.
QQQ Nasdaq 100 stocks are still the most potent group and continue to be pushed higher by the 8-day MA.
IWM Small caps have a bullish engulfing day and the highest close in several weeks, which is also back above the 8/21/50-day MAs. $179-$180 would be the next test higher.
DIA The Dow 30 stocks are green, but still dealing with some congestion as they trade between a flat 50-day and a falling 21-day MA today.
XLF Financials moved strongly through the 8/21/50-day MAs and are back on the north side of the March 2020 low AVWAP. Now there is some space to fill before this index reaches the flat 200-day MA, if it continues higher.
The Closing Bell
Once again, the markets don’t care what we think. So why think at all? Because it’s human nature. We can’t help ourselves. We want to do things that are logical and make sense.
In trading, that approach can be detrimental.
We need to keep an open mind. Use the charts to look past the stories.
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
May 17, 2023, 4:00 PM
Long: ENVX, GOOGL, JPM, LABU, LRCX, META, MU0526C66, SQQQ0602C27, TOST, TSLA0519C175
Short:
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike