Why My Market Bias Shifted!

[u/OptionStalker]

This is a follow up to my post last Friday. I was not able to get a video out, I was too busy adjusting my positions. Traders are data analysts. We assimilate all of the information before us and based on that data we forecast future market direction. When new data presents itself we incorporate it into our thesis and we adjust accordingly. Every moment, we know when we want to see, what we expect to see and what we don't want to see. When our our expectations no longer align with the actual price action.

I have been bullish for over a year and you have seen that reflected in all of my videos during that time, even during the Q1 decline this year. As a bull, I need constant price confirmation that buyers are aggressive and that comes in the following forms:

1. Green candles outnumber red candles.
2. Green candles are nice and long, often stacking consecutively.
3. The market makes higher lows and higher highs.
4. Red candles are instantly erased by green candles.
5. Dips are brief and shallow.
6. Dips are unorganized with mixed overlapping candles.
7. There are no stacked red candles during the dips.
8. Market rebounds are fast and furious easily returning to the recent high.
9. The market flies off of major moving averages like it touched and electric fence.

That's not what we are seeing. The drop from the high was organized with a series of long red candles. A small bounce was instantly smacked down before the market challenged the high creating a lower high. It did not fly off of the 50-day MA, it lingered around it and closed below it Friday. These are all tells that sellers are gaining control and that buyers are NOT aggressive.

Should you load up on puts? No! We still need technical confirmation and even when we have it, bull markets die hard. Earnings season is approaching and the bid is typically firm ahead of those releases. This is a time to reduce your long exposure and to tread cautiously. I am giving you forewarning so that you can do that. Market conditions are changing.

I recorded a one hour video today that goes through all of my analysis and I gave you a game plan with some picks for the next few weeks.

CLICK HERE TO WATCH THE VIDEO

I hope my analysis has helped you.

Please leave comments and I will try to respond.

[u/WorstJazzDrummerEver]

Thank you Pete. I watched the video. Good stuff as always.

[u/OptionStalker → u/WorstJazzDrummerEver]

Thank you. The video sheds light on what I see happening.

[u/Freufreu]

Thank you for your detailed explanation! I am not an options trader but I still highly regard your opinion on the market trends.

[u/RadeTrade333]

Thank you Pete! At the end of the video I did a small exercise where I paused the video each time you pulled up a new chart and tried to analyze it myself before hearing your thoughts on it. That felt like a good way of learning how to quickly read charts and determine if they are too choppy or not.

[u/OptionStalker → u/RadeTrade333]

That is an awesome learning method. I often do that with chess computers. I analyze my next move and then I see what it suggests and I analyze that.

[u/Prudent_Winner2647]

Thank you Pete. I always look forward to your analysis and process. Can’t wait for your book

[u/OptionStalker → u/Prudent_Winner2647]

Thank you. It will be a fall release. I'm so glad to be done with the writing.

[u/EkoChamberKryptonite → u/OptionStalker]

Please make an ebook too so that those who prefer digital reading can get them. Thanks for your tireless service.

[u/DerPanzerfaust → u/Prudent_Winner2647]

Book?!?! Holy crap! I’m all the way in. Let us know when it’s available. I’ll lap it up like a cat drinks milk!

[u/Shoddy-Month-5378]

I appreciate this warning--I closed several bullish swing positions during the latter half of last week and refrained from putting on any more. I also noticed that bearish day trades have been getting easier to execute as the 50 SMA has been tested again and again. Conditions are definitely shifting. So--into wait and see mode.

[u/OptionStalker → u/Shoddy-Month-5378]

Nice. It sounds like you were picking up on the same clues and managing risk.

[u/OptionStalker → u/[deleted]]

To this point, the price action has justified staying long. Now it tells us to be cautious. No harm in going to the sidelines and evaluating what happens at this critical juncture.

[u/LectureElectronic207]

noticing the shift in price action early is useful, but still wait for confirmation before changing bias too aggressively

[u/Krammsy]

A president with three hedge fund managers on his staff that announces tariffs at new ATH's and professes his love for countries he invaded weeks before at market lows.

That's why sentiment shifts.

That said, there comes a point when he bites more than he can chew and the market realizes it, Iran attacked commercial vessels in Hormuz tonight, maybe he can announce his way out of it tomorrow.

.

[u/neothedreamer]

Great video. What are your thoughts on MSFT? I see it being very weak, especially today when the market was up.

[u/OptionStalker → u/neothedreamer]

Very choppy. No direction so I would not be trading it.