Market Recap 1/15 - Downside Continuation?
Hello wonderful people, and welcome to another daily recap of the stock market by True Trade. Today we will dive into the market selloff, what it meant, plus review some of today's trade recaps.
INDICES
Market Selloff ?
As discussed in yesterday's post , we gave a warning in regards to a market selloff/collapse , and from the looks of todays price action , we had a very nice selloff indeed. $SPY and /ES opened just above their 3770 key level (9:30 EST) , and as soon as we broke , we had a sweet 30+ point drop.
(/ES daily chart up until 1/15 )
/ES stayed under that 3800 (around 379 spy) all day yesterday and had you been with us in our group or read the blog , you would've know exactly how to play that drop from 3800 to 3740 (60 points). Aside from that, tech continued its lead to the down side holding under 313.74 for the day (QQQ) , and closing just above the 310.28 support ( can still find its way lower to mid 306). Volatility stocks held to the upside such as UVXY and VIX, adding bit more prominence to the selloff. Going into next week if we open on a gap down key areas to watch for on $SPY could be 373.8-374 , 371 , 368 and 363.8-364.5. We closed the day towards the lows on most indices , and that should be a good sign for the bears , we could still get a bounce monday back into today's highs , but I am still favoring shorts now under 379 $SPY , 3800 /es, and even better weakness if we stay under 377 , 3770.
Today's Plays
Some hot picks for today were $JPM, $DIS and $RUN, with some mediocre plays on $NFLX and $FB. As always we start the morning watchlists posts with market sentiment as a whole , and it was pretty easy to see the selling starting to setup in on the big 3 major indices, so with that , we favored plays on the short end.
The top 2 Short plays on the day were $DIS and $RUN as both closed the piro day back below key supports , which indicated sellers stepping in again , looking for down moves to come.
-$RUN- We closed the daily candle on 1/14 back under the gap up open from 1/7 (the 89.22 level) and this gave us a short swing trade + a key level to short.
($RUN DAILY CHART UNTIL 1/15)
On 1/15 we opened well under the 89 level , and we sold some options into the 85 gap for profit + we looked to renter off 89.22
($RUN - 5 MIN CHART 1/15)
As shown in the image above , we took some profit at the grey highlighted circle from the swing trade , and then buyers stepped in , and we retook (or added more size) into the trade off the orange highlighted circle off 89 , looking for a revisit of 85 and lower towards 82 . This was a great example of a key level break , a retest and rejection , which is why it is always important to be patient and wait for the stock to come to you level for an entry , instead of chasing it after the fact.
$DIS- Disney was similar to $RUN , because it also closed the prior day back under a key level ,and held under all pre-market.
($DIS - Five minute chart 1/14-1/15)
The grey zone indicates the 1/14 daily close under the key level , and then the orange circle indicated an entry off the 174 level for a short , targeting the LOD (low off day ) 171.27 (made off the morning low) and then 170.45 as the first big gap level from 12/22.
$JPM- Jpm had some news based movement post earnings, as it had gapped back down to support, giving us a potential long trade off the 138 breakup zone
(JPM - Hourly chart 1/7-1/15)
The hourly chart shows the gap up level from 1/11 being an important level (138) the first revisit ( the highlighted circle) was bought back up, showing the indication of buyers off the zone.
The chart above shows the intraday action off 138 at open , having a huge volume spike of buyers , giving us a good entry with confirmation , with our first target back at the gap off 141 ( the orange circle would be the first profit target) and then the grey box could be a tight trailing stop if you didn't want to utilize the 138 buy/ low of day (the best trailing stop).
(KEY DOWNSIDE LEVELS POSTED 1/14 POST ----- CHECK IT OUT)
As seen above , even with the market heading down , we were able to take high probability plays , and still book a profit with great risk reward positions. A little lesson from today would be , always remember to follow the market trend or the trend of the stock , and then utilize those key levels to take high probability trades. If there's nothing that looks good, just wait till the next one. Again the goal of us as traders is to treat trading like a business and take the trades that give us the highest probability of success, not try to look for the trade that will get us rich quick.
Before market open Tuesday I'll try to have a post about trading psychology or the basics of options (if you have any suggestions on content , post them below 👇.
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