5 reasons to be cautious on markets near term

We started the week yesterday, on a bullish tone, breaking out above last weeks range to new highs, with a flurry of stocks making new 52 week highs.

We published this post discussing breakout candidates for long trade ideas.

But that bullish energy from yesterday changed rather abruptly after we opened up today with a gap lower, followed up by persistent intraday weakness.

SPY_8_16

Here’s 5 reasons to be cautious on markets near term
  • We’ve now got a potential island reversal in the SPY, trapping yesterday’s buyers.
  • We closed back below Monday’s breakout area, and into last week’s SPY range.
  • We closed the day on the lows.
  • The NYMO traded down to the lowest levels since 8/4.
  • We’re seeing signs of the VIX stabilizing around these levels.

 

Remember, these are just near term data points, intermediate and longer term time-frames are still dominated by the bulls.

Members and I initiated a position in SPXS today to play this potential reversal while keeping our existing long holdings on.

To get our real-time trade alerts and daily analysis, sign up at this page.

Best of luck trading, and remember we have the potential FOMC catalyst on deck tomorrow.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 20+ years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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