Managing Our Trades Into Evaporating Volume
Plus a quick look at the next week -- the "Santa Claus Rally"
Technical Breakdown
NYSE Breadth: 76% upside volume
NASDAQ Breadth: 66% upside volume
We had a decent day of breadth in the market, no doubt in thanks to the light volume we’re seeing ahead of the holidays. The markets made their morning move, then trended that way for most of the session.
My piece today is short and sweet.
It’s been a pleasure trading with you this month, and overall, I think we handled this month’s turbulence pretty well. We still have one week to go, but our “less is more” approach through the first half of December gave us the mental and fiscal firepower to really take advantage of the opportunities over the last week or two.
Remember, you don’t have to trade every day, all the time. Just one quality trade a day or a few per week can generate terrific results.
The Game Plan
We’re in one of those times where “proper trading” is rewarded. Meaning, proper entries, patience and position size are paying dividends, while sloppy trading — essentially the opposite of all of those observations — is being punished.
“But isn't it always like that?”
No. There are many times where sloppy trading goes unpunished, lulling traders into a false sense of security (usually during market-trend environments) before shifting gears and making them pay later.
For instance, our trades in PG, UNH, CGC, AAPL, ABBV and PFE have all been winners this week. We timed them right and worked them methodically with the flow of the market.
With Tesla, you may remember yesterday’s lesson about the stock. That is what I mean by “sloppy” vs. “proper” trading.
S&P 500
There’s not much left to talk about here. It’s the last trading day of the week, with markets closed on Friday Dec. 24 — (Here’s the full schedule).
The main level in the S&P index is 4718 to 4720 on the upside.
The downside is 4665, followed by the 10-day and 21-day moving averages.
For the ES, the upside level is 4712. The downside level is the 10-day, followed by the 21-day and 50-day junction.
Individual Stocks
I am not looking for anything new to put on today. I love the holidays and spending time with the family and I don’t want to ruin any of that with some sour trades after a great three-day stretch.
I’ll likely look to trim some of the longs we have accumulated for this week if we get a decent opening push.
Next week is historically a good stretch for the markets. That’s the traditional Santa Claus rally. Over the last 19 years, the SPY has been up 70% of the time for the last week of the year. Same with the QQQ.
Disclaimer: Charts and analysis are for discussion and education purposes only. I am not a financial advisor, do not give financial advice and am not recommending the buying or selling of any security.
Remember: Not all setups will trigger. Not all setups will be profitable. Not all setups should be taken. These are simply the setups that I have put together for years on my own and what I watch as part of my own “game plan” coming into each day. Good luck!