An incredible week of selling concluded with a strong final 15 minutes today. Did the selling create opportunity or is this the calm before the storm? Near term SPY, APPL, and credit say a short term tradable bounce is very possible starting Monday. Let’s dive in and review the levels.
Why did the sellers come in and what caused the 3X daily price movement range sell-off?
Why did gold sell-off? And will we buy it? Did the FOMC just save the market? And where will I buy first?
Beyond Meat reported earnings Thursday afternoon and while revenue looked sharp EPS was a little lacking and the stock ran into some sellers. We put a reliable strategy to work, now we just need to see if we can hold this specific price.
February’s seasonality is really starting to shine through here as we get into the end of the month. Does that set the stage for a rebound, or is there more selling to come? This is what I’m keeping an eye on for tomorrow and as we get into March.
Mostly at the watchlist level. In other words, a well-executed strategy in the wrong symbol or environment is still an error in the setup. Get the watchlist correct, the trades are easier and the follow-through is better. The volatility in the ES NQ YM and RTY make for difficult trading. It’s not the sell-off, it’s the higher-than-normal volatility. So look elsewhere, and here’s how I build that list.
I have a hypothesis about the current levels and what they could mean near-term for the sell-off. We’re going to continue to focus relative outperformance in a handful of sectors and stocks but not the broader averages. We’re going to stick with gold and bonds to the long side as we have since the first week of February. The “Phase 1 Ag Unwind” is still valid and let’s see what copper and RBOB gas could do next.
