Trading charts for Friday, February 17th
Good morning and Happy Friday,
We’re almost through another week and it’s been a wild one. We had hotter than expected CPI on Tuesday and hotter than expected PPI on Thursday. Overall the markets have taken it relatively well although yesterday’s close was a little ugly and based on pre-markets today (as of 6am EST) there’s a good chance we see more red today.
I spent 90+ minutes this morning going through 200+ charts and I’m seeing much fewer setups than yesterday so I’d be very cautious today about starting new positions and if you do, make sure you keep those stop losses extra tight. No reason to get aggressive right now with trading positions.
I still prefer buying the breakouts versus the bounces — the HZL (horizontal) breakouts through recent highs are my favorite because there’s no resistance above versus the DTL (downtrend line) breakouts where you’ll always run into resistance above your entry price from previous highs or depending on the depth/length of DTL you could run into moving averages or VWAPs which are both common rejection spots.
Sometimes I’ll trade the bounces where former TMLs (true market leader) are pulling back after a recent run up and now bouncing off their 8/9/10d sma/ema, 20/21/23d ema/sma or 50d ema/sma. Sometimes you can get attractive risk/reward entries on these pullbacks and bounces while keeping your stop losses very tight (under 1%) but your win rate on these might be lower as you get stopped out more frequently in a weak market and now these stocks have lost their momentum so the rips get sold faster plus if you’re buying a stock on a bounce off the 21/23d ema it means that stock might have to push through the short term moving averages ie 5/6/7/8d ema so often times these aren’t worth your time unless you’re staring at your screens all day and just want to scalp some 2-3% winners.
Below the paywall is my current portfolio (10 stocks) and watchlist (14 stocks with charts) with a link to my trading portfolio spreadsheet (with entry prices, position sizes, stop losses & YTD performance). Yesterday I closed out 11 positions of which 6 were winners and 5 were losers. Average winner was 4.1% while the average loser was -2.0%. You also get links to my two daily Zoom sessions at 10:30am EST and 3:30pm EST where I review charts for both my portfolios plus my watchlist stocks and explain where & why I started new trading positions or closed out existing ones.