Patience For Sound Moves Into New Year

2020-12-14

Monday was a flurry of action in the markets and among Simpler’s traders.

Markets started the week strong out of the open, flattened out quickly, and the Dow pulled back heavily into the final hour Monday.

The Dow closed at 28,861.55 points to fall .62% (dropping 184.82 points on the day — after being up early by more than 200 points). The Nasdaq was positive on the day at 12,440.04 points for a .50% gain while the S&P 500 dropped .44% to 3,647.49 points.

The dip in the Dow is credited to ongoing Covid-19 cases rising rapidly despite the first public vaccine being administered. Technology tickers continue to bolster the Nasdaq while the S&P trending with the choppy overall market.

As the market overall continues to flag sideways after a steady run up, Simpler’s traders are watching charts on higher time frames such as the weekly and monthly. There are key signals showing areas building energy — in key stocks and across sectors — but the focus is having the patience to wait for this energy to fire off.

The market appears in good shape, but just isn’t showing confident signs of breaking strong to the upside as it has pulled back in recent sessions. Simpler’s traders are working setups in this choppy market — some are more complicated and designed for intermediate or better skill levels — while looking for stronger, limited risk opportunities to develop.

The final days of trading this year present an interesting run through the upcoming holidays. This week and next are short weeks with a holiday — markets closed — each of the next two Fridays. It appears to be a toss up whether there will be any strong activity in consecutive shortened weeks.

This may prove an opportune time to sit back and develop more conservative, yet complex setups. Precise price targets may be more elusive compared to strategies that “stay in the range” as the market sorts out a more clear direction.

Expectations are the New Year could prove a quickly changing market with fast moves in any direction.

We Saw: First Covid-19 vaccine administered — 

  • Markets not liking lockdown potential, despite vaccine arrival
  • Politicians still playing politics with economic stimulus
  • More small businesses pledging to fight lockdowns

We’re Watching: How back-to-back short weeks play out —

  • Conservative, complex setups to play choppy movement
  • Potential for long upside run into earnings next quarter
  • Setups in: NVDA, GOOGL, TSLA, IWM, OKTA