Sloppy Market Reveals Trading Opportunities

2020-07-29 | Simpler Trading Team

A sloppy week of trading produced a midweek uptick despite volatility from a rash of earnings reports mixed in with an FOMC meeting and announcement.

The Dow closed up 26,539.57 points to gain .61% (adding 160.29 points on the day). The Nasdaq jumped to 10,542.94 points for a 1.35% move up while the S&P 500 added 1.24% to 3,258.44 points.

Earnings reports after hours Tuesday were solid and the market responded Wednesday with positive signs from the opening. Big tech, skyrocketing Kodak stock (trading paused multiple times), gold striking another record, and TSLA pushing higher all contributed to a positive session.

No change from the Fed on rates and a commitment to stay “all in” to counteract pandemic issues kept markets pushing to the upside.

These factors and more have created choppy conditions for traders, but lots of potential thanks to the constant action.

Simpler’s traders are guarded against sudden switches in momentum while playing shorter windows of opportunity. These profitable “spurts” are showing up in smaller time frames in key sectors that reveal squeeze setups.

The ongoing goal this week is keep accounts close to all cash (get in, get out) and work setups in stocks with steady momentum compared to the choppy market.

There are strong signals to avoid shorts and stay away from “hold and pray.”

We Saw: a positive uptick in an otherwise choppy market — 

  • All three indexes turning positive on the day
  • Market not worried about Fed plans
  • Uptick after string of negative sessions

We’re Watching: for clear momentum signals across the board —

  • For any pullback to reveal buy opportunities
  • Steady moves of any “honey badger” stocks
  • Strength of momentum signals in precious metals

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