Market Outlook & Trade Ideas

Dollar Strength
The US Dollar continues its advance as it nears taking out resistance at 95. The Euro and the main commodity currencies fell. Being a safe-haven currency, the YEN has been holding up well.  Not shown is the Chinese Yuan which continues decline as trade tensions mount.

SPY 60 minute Chart – Ugly Price Action
Referring to the chart, we can see price is bound by 2 sizeable gaps. In morning trading, they quickly ran price up to gap resistance, then took a peek into the gap.  That look failed and price fell apart for the rest of the day.  Now price sits at gap support at the lower end of the range.  We may see a small reaction off of this low, but I ultimately expect a lower gap fill to 268 followed by a retest of the most recent May low at 266.5.   I am short SPY
Annotated SPY 60min Chart:   HERE

QQQ Daily – Positioned for further downside
Price rolled out of the recent divergent high ( marked ) with an impulsive gap down on Monday. Tuesday was an inside day, followed by another sizable bearish engulfing candle Wednesday.  I am positioned for further downside and expect a test of the 166-167 level that I have marked.  It has to be noted that the gap down on Monday has left an open gap. These gaps tend to get filled; we just don’t know when. Keeping an open mind with max flexibility.

Annotated QQQ Daily Chart – HERE

IWM – Price going lower
Small caps have been very resilient during the recent turbulence. Price broke out from the resistance layer at 159 / 160 and peaked last week. Now price has fallen from a bearish rising wedge as shown on the chart.  First real test will be the rising 50ema shown in green; then a retest of the breakout at 160.  You can see the RSI has rolled over and broken trend, as has the PPO momentum indicator.  To my eye and way of thinking, this points price lower.  Here too, we have an open gap left behind by the gap down on Monday.  I am positioned short IWM.   $166.50 is my stop.

Annotated IWM Daily Chart – HERE

$XLF Daily – Something is Broken
Monday, XLF lost its 200ema, shown in orange. Yesterday it broke support on a significant 5 month bearish descending triangle. On a measured move basis, the target price is way down at $24 or slightly below.  Traders could put on a low-risk short using $26.75 – $27 as a stop.  I plan to put on this trade via at-the-money XLF puts. Aiming out in time toward September.
Annotated XLF daily chart – HERE

Concluding Remarks and Trade Status update
$AKAM Long – Swift rug pull stopped me out for a loss; could have taken nice profit but didnt 🙁
$CALM Long – Still long and up 11% which is nice considering the bearish price action overall
$EEM short – Trade is working
$IWM – I own jul 6 165 and 163 puts
$QQQ and $SPY  Own short dated puts. Will likely roll down depending on price action
$XLF  Plan to initiate September puts today

Gaming Stocks are Weak
All the big guys ( WYNN / LVS / MLCO / IGT etc ) are either testing their 200ema or have already lost it.  I have no positions but all the charts are near key spots.  Traders are encouraged to investigate these regardless of whether you have a bullish bias or bearish. The 200 ema can be used as a low risk go/no go on a long or short position. You will easily know if you are right or wrong.

Overall, I think the price action in the market speaks for itself.  It is bearish with many trend lines and indicators pointing south. I am going to position myself accordingly until price action tells me the corrective action has subsided.

Thank you for reading; hope it was helpful

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