Over the last couple of weeks, I’ve mentioned the ‘Magnificent 7’ tech stocks need to report their earnings and then the likelihood of a pullback increases significantly.
Thursday’s action only reinforced that view. Apple and Amazon announce this week. Nvidia on August 23rd.
I’m not totally clear WHEN the pullback will happen, but that it will happen – and quite soon – is something I AM confident about.
As I said: “As mentioned last week, the likely scenario for this bull run is that the giant techs need to report their earnings before this market can take a proper rest.”
Thursday was a classic ‘monorail’ (outside) bearish bar, but the market recovered its poise on Friday. A break of Thursday’s low would be a constructive sign to the downside.
Our mean-reversion dashboard pies are not at extremes – and they don’t necessarily get there every time either – but when they do, it sure does make market timing for reversals much easier!
By now I hope you’re seeing the beauty of our method, combining broader structures (Shrinking Retracements) with leveraged position-building activity (the OVI) and more micro structures (price/volume/Key Levels) to form a cohesive strategy to trade consistently.
Today you’ll see a reminder of just how powerful and quick this technique is with our unique tools.
Market Outlook
Even if it’s just an early shot across the bows, Thursday’s action increases the likelihood of a pullback happening sooner rather than later. Friday was a good recovery, but even if we make new highs, I would expect further bearish monorail bars like Thursday to follow in due course.
Watch the video at the foot of this email for more detail.
The Main Indices
The S&P remains overbought but the first signs of vulnerability are evident.
The QQQ touched its 20-dma and recovered well.
The IWM also remains overbought and will react the most when the inevitable market pullback does happen.
The DIA is still miles overbought, and a break of Thursday’s lows should see it drop to the 20-dma at least.
Market Timers
Longer Term Market Timer (OVIsi): Still full green but slowing slightly.
Medium Term Swing Timer: Bullish and not overbought… yet. It’s now flirting again with being overbought. One of these days it’s going to be official, and meaningful.
SPY OVI: All the main index OVIs are neutral to negative, and in the QQQ’s case not even neutral. This is somewhat divergent to price action.
Fast Filters Stock Selection
Fewer nuggets, but a few nevertheless.
Today I’ve included a couple of bearish setups along with some post earnings setups in both directions.
Here is a smaller list of stocks that look interesting for our consideration. Very soon I will only post this in our new Expert Watchlists area, so you’ll have to log in to see it.
Remember to reference the video so you know what my sentiment is on each one:
ABBV AXP BABA BAX CINF FTCH GD HSY INMD INTC MMM MRK MRO MSFT MUR SMAR STX TGT TRIP VLO VOYA WY XLRE ZI ZM
Events
Our Stocks Summit in London on 2nd December will be the most practical ever, and with the most bonuses ever.
Each session will have a practical exercise for you to complete, so you can build your confidence in finding the exact type of setup you want to focus on. These practicals will include Market Timing and specific stock strategies and will only take 15-minutes for you to complete. This will give you the confidence to use our tools to their maximum potential while saving you huge amounts of time.
We’ll have the Foundation Day online the Saturday before the big event so we can focus on more of these practicals during the event.
Video analysis
Remember, you can play the video at 1.25x or 1.5x speed if you want to save time! I have placed all the stocks covered in today’s review in your “Latest Preview” watch list.
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