Trading Rollercoaster

THE WEEK

We had a very strong trading herd reaction to the FOMC announcement on Wednesday.  I was surprised.  There was a strong consensus that there would not be an interest rate hike this quarter.  There wasn’t which most folks thought was good moving forward yet the trading herd sold off positions causing a big downturn in the Market.  I am still shaking my head.  I had expected the opposite reaction.

The next day prices continued their upward march.  Also note that every other day we are seeing a new 52-week highs.  We hit the 52-week high, price flatten out for a day or two and then breaks out to a new high.

LOOKING AHEAD

I am expecting more of the same trend up this coming week.  This is the last week of the heavy earnings announcement cycle and there are a lot of good set-ups starting to appear.  The only major economic announcement this coming week is the PMI on Monday.  I do not expect much reaction from traders upon the announcement.

The one issue I’m watching closely is even though the Market is in an uptrend, I noticed the number of tickers hitting their 52-week lows is increasing.  For two plus weeks there was an average of 55 stocks hitting the 52-week low.  On Wednesday that number jumped to 76 – not surprising consider the Market dropped on the Fed announcement.  But then then Market pushed up and resumed the up-trend  on higher than normal volume while at the same time the 52-wek lows jumped to 91 and then to 137 on Friday.  This is when I go on caution and do not trade aggressively to the upside.

HOW AM I DOING?

I lost this week as I expected a different reaction to the Fed announcement and had set up my trades for the Market to go up.  It happens and the key is not to panic and over react which I kind of did.  My bad.

This week’s DEEP DIVE on Thursday’s Webinar

Why and how Earnings Season sets up for a profitable trading quarter