markets finish near highs after volatile week

Reminder that I am hosting a free webinar on Wednesday July 22nd discussing how I analyze price action, how I find trade setups, and how I manage risk & position size. Register here –> http://thetraderisk.com/webinar

$SPY markets were exceptionally volatile this week with a series of +/- 1% open gap days throughout the week. The good news is we have a much clearer near term range to work with now thanks to the strong pivots off these lower and upper bounds. 204.50 to 208 is the 3 point range we need to pay close attention to heading into next week. Friday’s session was the first day we actually saw the open gap stick as bulls were able to maintain their gains and close us out on the highs. So the bullish case for next week is that we were able to close the week out near the highs after testing 204.50 support and successfully holding on two attempts. The bear perspective, is that we are still under important 208 resistance, and right up against the declining fast moving averages. For aggressive longs you could take shots here with an all-bets-are-off stop loss against the lows of the week down at 204.50. For more conservative types, we would want to see resistance at 208 get taken out and maintained for a few days before getting to comfortable on the long side. Members and I increased our long exposure a bit on Friday, but still overall on the light side (~33% allocated).

$IWM weekly chart of the small caps this week to demonstrate the structure of the longer term trend. The bulls stepped up and prevented a third down week in a row from happening and it came at an import band of support between 120 and 123. This weeks low will be a good line in the sand for bulls to hold going forward if they are going to keep this uptrend in tact and and looking strong.

$IBB still plenty of cash hiding out in biotechs as the bulls fight to maintain some constructive looking price structure. There’s a nice floor of support underneath price right here within this 360 – 368 area which seems like a good spot to trade against on the long side. As long as we can hold that area I remain constructive and interested in this sector for opportunity.

$TLT midway through the week on Tuesday and Wednesday bonds were showing promising signs of breaking out of this recent range and potentially putting in a short term bottom around 116. Unfortunately for bond bulls the end of the week negated all of that upside action and we closed back at the bottom of this range and once again threatening to continue lower in this intermediate term downtrend.

$FB perking up again after consolidating for a couple of weeks and closing on the highs of the week up against an important area of near-term resistance. This is a very bullish pattern as Facebook broke out to new all time highs at the end of last month above 85 and now looks ready to move again after brief consolidation. One i’ll be watching closely next week for continuation higher.